Australian Tape Manufacturers Association Ltd & Ors v The Commonwealth of Australia

[1992] HCATrans 67

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No Ml2 of 1990

B e t w e e n -

AUSTRALIAN TAPE MANUFACTURERS
ASSOCIATION LTD, BASF AUSTRALIA
LIMITED and TDK AUSTRALIA PTY

LTD

Plaintiffs

and

THE COMMONWEALTH OF AUSTRALIA

Defendants

MASON CJ
BRENNAN J
DEANE J

DAWSON J

TOOHEY J

Tape 163 11/3/92

GAUDRON J

MCHUGH J

TRANSCRIPT OF .PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 11 MARCH 1992, AT 10.17 AM

(Continued from 10/3/92)

Copyright in the High Court of Australia

MASON CJ: Yes, Mr Solicitor?

MR GRIFFITH:  If the Court pleases, with the consent of my

learned friends, may I hand to the Court short

written submissions answering my learned friend

Mr Ellicott's long submissions under tab 5, if they

could be distributed. Your Honours, consequent

upon the direction particularly directed from

Justice Brennan with respect to the wording of the definition and the wording of paragraph 39(d) of

our defence, may I ask the Court if Mr Merralls

shortly can address the Court on the historical and

constructional issue in relation to that? I think

it would clear up perhaps some uncertainty from my

answers yesterday.

MASON CJ: Yes.

MR ELLICOTT:	Your Honours, could I just say this in relation to that, that I thought that yesterday
that matter had been dealt with by Your Honour
saying that should any question arise as to the
need for facts, Your Honours would direct that and
direct a finding of facts. It would be unfortunate if the Court is going to get involved in some toing and froing about the matter.
MASON CJ:	We made our attitude quite clear yesterday,

Mr Ellicott.

MR ELLICOTT: If Your Honour pleases, but I - - -

MASON CJ:  We will hear what Mr Merralls has to say. What

is the point of this exposition, Mr Merralls?

MR MERRALLS :- It arises out of a question asked by

His Honour Mr Justice Brennan on page 157 of the

transcript yesterday, Your Honour.

MASON CJ:  To what end are you moving in the comments that

you are about to make?

MR MERRALLS:  I am merely going to explain the presence of

paragraph (d) and to say something about it,

because my learned friend Dr Griffith was

inadvertently sort of led off the course by not

knowing something that had occurred when

paragraph (d) was inserted in the defence.

MASON CJ:  I see.

MR MERRILLS: Subparagraph (d) of what is now paragraph 39

of the defence, that is one of the allegations as

it were of fact made further or alternatively to a

number of specific denials and it is that tapes of

the relevant kind are tapes of a kind ordinarily

Tape 164 11/3/92

purchased or hired for use for making copies of

sound recordings and His Honour's observation was

that the language of that paragraph appeared to

echo that of the definition of "blank tape" in

section ZZJ and that it does, and I think he asked

in substance whether that was intentional or

whether the allegation in the defence was intended

to have some different meaning from the meaning of
those words in the interpretation and then

His Honour proffered an interpretation.

Now the position is this: originally the counterpart of paragraph (d) was in a slightly

different form; it did not reproduce the language

of the statutory definition; it paraphrased it and

it made an allegation about the ordinary use of the

relevant tapes. As part of the agreement between

myself and Mr Hayne, who was then senior counsel

for the plaintiffs, leading to the agreement that

there should be a proceeding by demurrer to the

defence, that was one of the allegations that was
changed at the request of the plaintiff to

incorporate the language of the statutory

definition. So that was done intentionally and we

were happy to stand by the language of the

statutory definition for the purposes of the

demurrer.

Now, doing so, we adopted a different

definition from that which was proffered, I think,

on the spur of the moment by His Honour

Mr Justice Brennan yesterday, and we respectfully

submit that the definition enhanced the pleading

refers to the ordinary purpose for which tapes of a

particular kind are purchased or hired and not to

the kind of tapes which a purchaser or hirer who

wished to make copies of sound recordings would

purchase or hire which, as I understand it, was the

interpretation proffered by His Honour. We say

that that is the ordinary meaning of the words, but

- if there is an element of ambiguity, reference to	extraneous materials is permissible and such	reference shows that 85 per cent, or roughly
85 per cent, of tapes of a particular kind are used for the purpose of making copies of sound recordings, and hence the operative provisions of the amending Act take that kind of blank tape as the basis for making the levy, or royalty, and then deal with as many of the 15 per cent of the other
uses by means of exemptions, refunds, and
prescriptions.

One might say that if the cost of justice in

the State of New South Wales is going to be

increased unreasonably, there is a possibility for

the Supreme Court of New South Wales to be

prescribed for the purposes of the Act in order to

Tape 165 11/3/92

bring itself within the 15 per cent. The short

point is that the history of the provisions, the

extraneous materials, and the obvious purpose of

the section, in our submission, require the
interpretation that I have suggested. If the Court

pleases.

MASON CJ:  Thank you, Mr Merralls. Mr Catterns.

MR CATTERNS:  May it please the Court, I now also seek leave

to intervene on behalf of the proposed society.

Your Honours, I have a short written submission

that deals with the application and a substantive

matter we would seek to put.

MASON CJ: Yes.

MR CATTERNS:	Is it convenient to hand that up?
MASON CJ:	Now, Mr Ellicott, do you have any opposition to

the grant of leave to intervene?

MR ELLICOTT:  Your Honour, we would oppose the application.

The Solicitor-General is here to represent any

interests that my learned friend, Mr Catterns,

could represent. Obviously it is a matter for the
Court to decide whether it needs an amicus curiae

after having heard the Solicitor-General of the

Commonwealth and Mr Merralls, but we would submit

that it is not - it is again a matter for the Court

- a practice to encourage and Your Honours, of

course, have references to various cases there in a

document that has been handed up. Your Honours may feel that it is enough to have the document, but we

would submit that in the circumstances the

application should not be granted.

MASON CJ: There will be a grant of leave to intervene.

MR CATTERNS:  May it please the Court. Your Honours, I can

be very brief. I do not seek to go through the

submissions which are self-explanatory. We

respectfully adopt what has been put on behalf of

the Commonwealth. The copyright owners whom my

clients represent do want to support the

constitutional validity of the scheme, and the

short additional point we make which also meets

some submissions made by the plaintiff, is that

either through the notion of authorization, or

through analogous notions, it has long been a part

of copyright thought to impose liability on

somebody other than the person who does the

ultimate act of reproduction or performance or

whatever it may be.

If I could just ask Your Honours quickly to

look at the current Act. Section 31 sets out the

Tape 166 11/3/92

copyright owners exclusive rights. In the case of

a musical work:

(a)(i) to reproduce the work in a material

form -

(iii), for example, to perform it, and so on. By

section 13(1), those various acts are called acts

comprised in the copyright. Sound recordings are

dealt with in section 85, and that is the same

provision. But, if Your Honours would note,

subsection (2) says:

the exclusive right to do an act in relation
to a work, an adaptation of a work or any

other subject-matter -

that includes sounds sound recordings -

includes the exclusive right to authorize.

That notion has been in Australian copyright

law since the 1905 Act and English law since the

1911 Act. In our submission, the fact that in a

recorder or the sale of blank tape is not an

given case, for example, the House of Lords in the

authorization, that says what the current law is.

It does not prescribe the limits of the notion of liability for the acts of another person.

In our submission, what Part VC does here is

imposes a liability on the seller for the act of

sale selling material which is likely to be used,

and therefore there is no need for any inquiry as

to whether or not in fact 85 per cent or

89 per cent of people do use it. It is the act of

selling the dangerous material that is likely to be

used which is itself well within copyright thought,

an act which can attract liability under copyright

law.

McHUGH J:  Does that mean that you could impose liability on

a carrier of these tapes?

MR CATTERNS:  Your Honour, it all depends on whether there

is a sufficient connection between what is done and

the likely infringement. In my submission,

probably not a carrier.

McHUGH J:  What about a newspaper which advertises; carries

an advertisement?

MR CATTERNS:  Your Honour, that just depends on the facts of

what the advertisement says, but that is quite

possible. It is perfectly possible under the

Tape 167 11/3/92

current law for a newspaper advertisement to

constitute authorization.

BRENNAN J: Is this not rather like suggesting that the

gunsmith is guilty of murder?

MR CATTERNS:  No, Your Honour, but if somebody provides a

loaded gun to somebody, knowing that ordinarily, to

use the definition, he will use it to shoot

somebody, he may have some liability. That is the

notion of, for example, the Moorhouse case. It is

material here which, by definition, is likely to be

used for this purpose. It just as in copyright law

for centuries.	The Act has focused on plates as
well;	a plate that is likely to be used.

McHUGH J: But this is a tape that does not have to be used

in breach of copyright. It can be used for

perfectly legitimate purposes, the same as a knife

can be used for legitimate purposes. It does not

have to be used to inflict grievous bodily harm.

MR CATTERNS:  Yes, Your Honour, but by definition it is

ordinarily used for this purpose, and so the

provision of it is, in effect, deemed to be

something which attracts liability.

McHUGH J:  On a crucial point, is it, that it is ordinarily

used? I mean, tapes of this kind may ordinarily be

used. It does not mean any individual tape.

MR CATTERNS:  Yes, Your Honour. So then the Act says if you

provide, sell, a tape which is ordinarily used, you
are liable to a royalty but, Your Honour, then the

question of the amount of royalty depends on actual

use. That is what the tribunal looks at. So the

number of dollars or cents per tape depends on

actual use, and that is the tribunal's job, but the

liability per se stems from the provision of the

tape which is ordinarily used in this way.

-

McHUGH J: Well, go back to my illustration yesterday.

Supposing there is some particular wholesaler

whose trade is selling tapes for Sanyo machines of

one hour to the Supreme Court of New South Wales,

so that not one of those tapes is used for breach

of copyright, this Act applies to that wholesaler.

MR CATTERNS:	No, Your Honour, with respect.
McHUGH J:	I know they can get out of it under

subsection (3).

MR CATTERNS: Yes, Your Honour. It applies in the first

instance because - - -

Tape 168 11/3/92

McHUGH J: Well, the wholesaler does not get out of it, does

he? It is the consumer.

MR CATTERNS:  Yes, Your Honour, but those exemptions can

filter through the system in various ways - back up

through the system in various ways, but because in

general that type of tape is ordinarily used in
that way, the legislature imposes the general
liability and that is really, exactly, in my
respectful submission, analogous to what was said

in the Moorhouse case. Perhaps just on that, in

answer to something Your Honour asked yesterday,

there is no whole scheme in the Act for

photocopying and there is an agency called

Copyright Agency Limited which collects and

distributes millions of dollars.

Your Honours, unless there is anything I can

assist the Court with further, they are our

respectful submissions.

MASON CJ: Thank you, Mr Catterns. Mr Ellicott?

MR ELLICOTT:  Your Honours, Mr Merralls has raised this

question of paragraph 39(d) and what it says. It

is there simply to reflect what the section says

and it is not there to say anything other than what

the section, in its definition, means and,
therefore, it adds nothing to the debate. It just

cannot rise above the definition of blank tapes in the section and it, therefore, is a matter for the Court to determine the validity, obviously, on the

basis that the Parliament is seeking to control
blank tapes in this way, and those are of a kind

ordinarily used. They are plain English words and,

we would submit they mean fundamentally, I think,

what Your Honour Mr Justice Brennan said and, I

think Your Honour Justice McHugh said much the same
thing a moment ago.

It does not follow that because the tapes are

of a kind that are ordinarily used that the person

who sells them is in any way involved in any

authorization. Authorization is a counterpart of

control. That has to be so. It is the other side

of the coin and there is no sense in which a vendor

of tapes is authorizing a use of the tapes for

copying works which are within the scope of this

part of the Act.

BRENNAN J: Well there is nothing to authorize. ZZM

eliminates the right, does it not?

MR ELLICOTT: There is nothing to authorize and nobody is

asking anybody to authorize anything; they are just

buying some tapes, so that we would submit that

really nothing turns on 39(d). Now there has been

Tape 169 11/3/92

a reference by my friend to a figure of

85 per cent. Now obviously that is not before the

Court and I must say to the Court that that is a

matter of debate and the Court should not take account of any such figures. Any figures that

exist, as I understand the sense in which these

words are uttered, 85 per cent, it is referring to
those tapes that are, used for domestic purposes.

The figure 85 per cent is very much in debate, but

quite apart from that the figure that is quoted or

stated is not referring to those who are relevant

copyright owners. That is, it is not talking about

that private or domestic use that relates to people

who are within the definition of relevant copyright

owners. And I will come to that a little later,

but that is an important aspect of that and again the Court should not get into that area, we would submit, unless at the end of the day it thinks that

it has got something to do with the validity of

these provisions and we accept that and if there

has to be an argument about it, or a factual

inquiry, well so be it, but it would indeed be a
very unusual case.

In other words, the validity or invalidity of a law should appear on the face of it. Section 92 obviously - over the years there has been debate

about whether factual matters can be brought before

the Court and one such case was the Barley

Marketing case and in that case we agreed on some

facts in the supreme court. Whether they were

enough, well it does not matter, but they were the

agreed facts. In other cases under section 92 that

may well be the case, but that is an exception

rather than a rule, we would submit, in relation to

these matters.

Now, Your Honours, could I be forgiven -

because it really does go to some rather

fundamental propositions on copyright - in taking

- Your Honours just quickly to the decision of

Mr Justice Kitto in Fairfax, 114 CLR 1.
Your Honours no doubt know it off by heart.	It is
at page 6 at the bottom:

The argument for invalidity not

unnaturally began with the proposition that the question to be decided is a question of substance and not of mere form -

His Honour immediately says there is a danger in

that, and it is the danger that my friend has not,

we would submit, acknowledged:

but the danger quickly became evident that the

proposition may be misunderstood as inviting a

speculative inquiry as to which of the topics

Tape 170 11/3/92

touched by the legislation seems most likely to have been the main preoccupation of those

who enacted it. Such an inquiry has nothing

to do with the question of constitutional

validity under s 51 of the Constitution.

Under that section the question is always one of subject matter, to be determined by

reference solely to the operation which the

enactment has if it be valid, that is to say

by reference to the nature of the rights,

duties, powers and privileges which it

changes, regulates or abolishes; it is a

question as to the true nature and character
of the legislation: is it in its real

substance a law upon, "with respect to", one

or more of the enumerated subjects -

Your Honours, in the case, State Chamber of

Commerce and Industry and Others v The
Commonwealth, which I think was the Second Fringe

Benefits case, 163 CLR 329, the Court repeated much

the same thing. Its-aid:

In characterizing a law the Court has regard

to its operation, to what the law does in the

way of creating rights and obligations, and

how it operates within the permitted area of

power. It matters not that the provisions

which so operate may be intended to achieve

some other purpose.

So that purpose and object have really got very little to do with the matter. The question

is:  how does the law operate, what are the rights,

obligations, powers and privileges which it

changes, regulates or abolishes, and do they lie

within the scope of the power?

If, as we submit, copyright is, on the one

hand, the right to copy, and legislation more

particularly is related to the control of copying,

then there has to be within the law some right,

duty or obligation or privilege, et cetera, that is

the subject of the law which is being controlled in

relation to copyright. It is obvious, we would

submit, that here the vendor - just arising out of

the discussion that has just taken place, we would

submit that the vendor has no relationship as such

with the act of controlling copyright.

The vendor cannot control copyright. The

vendor has no obligation to stop people from using

the tapes. The vendor has no power. The vendor

has no right, The vendor has no privilege.	The
only privilege.	The vendor has under our system,

subject to legitimate provisions, is to sell blank

tapes, and then the citizen is able to use the tape

Tape 171 11/3/92

and if the citizen breaches, then it is against the

citizen that any action must be taken.

Now, we would submit, therefore, that there is

no relevant nexus between the provisions of ZZN, P

and Q, and the subject-matter copyright. M removes

the obligation. If anybody is to compensate, it is

those who use the copyright which would otherwise
have existed. Clearly, the vendors are not the
users or the authorizers of the use and it is not a

provision, therefore, which makes the users pay.

Your Honours, there could be, perhaps, a

provision like this that said anybody who purchases

a blank tape must swear a declaration, for

instance, that they will not use the tape for the

purposes of copying this particular material, and

if they do not swear that declaration with the

vendor, then they shall pay an extra dollar on

every blank tape that .is sold. Now, if that was

so, one might think there is some connection.

Obviously, that is a very clumsy law and nobody who

wants to be held in high regard as a legislator is

going to pass such a law but, really, if they want

to get into that area, the legislators, that

is, then they have to do something like that

because that is going, one might think, to a

matter - and Your Honours may disagree with even

this - but at least it is going to a matter that

touches the possibility of the tape being used for

purposes which the legislature wants to do

something about. That, we would submit, is one

type of law.

Another type of law, obviously, is that that

my friend concedes which is not related directly to

the question of copyright at all. It is a tax but

a tax - has the odium of the tax, but there is no

question that if they want to tax blank tapes, it

is an excise, no doubt, then so be it, and they can

then provide, as they have done in many cases, for

equivalent amounts to be given to some society in

order to distribute it in a particular way that

fulfils Commonwealth purposes.

Your Honours will recall the case of Logan

Downs v The Commonwealth, 112 CLR 177, and that

involved legislation which imposed a will tax and some rather inventive counsel tried to argue that it ought to be found to be invalid. They did not

succeed in that, no doubt, due to the ingenuity of

the counsel on the other side, but the fact is,

Your Honours, that there the argument was met at page 187 by this statement:

The starting point of the other

submission involving the invalidity of the

Tape 172 11/3/92

Wood Tax Act was that the various Acts here

under consideration form a scheme. Of course,

in one sense they do. It is obvious that it

requires money to carry out the provisions of

the Wool Industry Act and it is no less

obvious that Parliament decided that part of

the cost of the administration of that Act

should, in an economic sense, be borne by the

wool producers as the special group to be

benefited by the operation of the Act and that
the remainder of that cost should be borne by
the general body of taxpayers. Nevertheless,
the invalidity of the Wool Industry Act would
entail the invalidity of the Wool Tax Acts
only if it were to appear from the Acts

themselves that the latter were not intended

to operate except in conjunction with the full

operation of the former according to its

terms.

Now Your Honours, likewise here, and it is not

in debate, there could be a taxing Act and there

could be a grant out of consolidated revenue of an

equivalent amount to a collecting society. It is a

common form of legislating for the Commonwealth and

it is not a part of our argument to say that that

would be necessarily invalid. One would have to

see it before one can concede that, but it looks as

if that would be an appropriate way to do it.

Now, there is a lot in my friend's submissions

that suggest this is the only way of doing it.

Well, of course, with very great respect, that is

not correct. This is not a debate about whether it

is a good thing; that is not to the point. We are

not involved in Lord Templeman's desire to change

the law in the United Kingdom; that is not

involved. Parliament has made a decision that it

wants to do something about this, but the fact that

it has does not mean that this law necessarily is
valid.	Now, that is the proposition that my friend

is trying to advance. That is, because there is a

movement around the world to do something about

this, well naturally the Parliament must be able to

do it in a convenient way. That, we would submit,

is full of fallacy under our law.

In these other countries, Sweden for instance,

they do it by a tax and we do it here by a tax.	In
the United States they have got other constitutional provisions; they do it another way, if they do it. They have not apparently done it

yet. Needless to say it is a strong part of my

friend's argument to get as many countries in as he

possibly can, because whilst it is only Australian
copyright people involved, well naturally, the

number of people that use these tapes, offensive to

Tape 173 11/3/92

the provisions, is relatively small. They love

American music, in other words, but I am offending

now; I am getting into factual areas I should not

get into, but as my friend opened these things up,

as if they are areas of a clear path ahead that

this is the only way of doing it, it is obviously

not the only way. And once that is found to be so,

that must be, we would submit in practical terms,
the end of the argument, because there is no way in

which one could say, we would submit, that these

laws are laws which relate to copyright. On their

face they have nothing to do with copyright and the

fact that the funds are going to be used in a

particular way, is not to the point. Nor is the

fact that in the course of events people might use the tapes in a particular way are relevant either.

If my friend is right then surely if paper is

something that might be used for copying, of a kind

ordinarily used for copying copyrighted works by

somebody either using a typewriter or writing with

a pen, then is it to be suggested that the

Commonwealth Parliament can thereby pass a law

imposing a levy of this kind on people who sell

paper? We would submit not, and if you go that far

then where does it stop? Take tapes: why should

you not say, under such a law, that you can control

the manufacture of blank tapes? Why stop at just

putting a levy; why not control their manufacture?

This would be a great way for the Commonwealth to

expand its power in these areas under the copyright

power. Or why not pens or typewriters or anything

else, copying machines and the like, and we will

get into computers eventually? That, of course, we

would submit, is fanciful. It is not the way in

which our Constitution should be read, because

those laws are not laws that fall within the

definitions that have been laid down in this Court

or accepted by this Court.

Another aspect of it that my friend referred to was the position under the Berne Convention.

Now, there was a principle in the Berne Convention

that people should be treated equally - equal

treatment - not reciprocal treatment, but equal

treatment. Now, this legislation is arguably

offensive to the Berne Convention and if we are

going to talk about the Berne Convention,

Your Honours need to know that there is a debate

about that, but we would submit that is irrelevant.

The question of the validity of this law is not

going to be determined by that, but it would be

wrong to think that somehow this has the blessing

of international copyright people such as WIPO and

the like. Control or some regulation in relation
to blank tapes - it might have a conceptual

attraction in such organizations, but it would be

Tape 174 11/3/92

based on equal treatment for people, not on the
basis of reciprocal treatment. So, my friend, we

would submit, gets nothing out of that.

Now, Your Honours, a deal has been said about

the similarity between these provisions and the

compulsory licensing provisions contained in the

Act. In the document in the folder we handed up, under tab 6, Your Honours will find a helpful table

at the back of tab 6 and it will enable

Your Honours to get a bird's-eye view fairly

quickly, as we would submit it, of these various

schemes. Now, there is the "Record-1-ng of musical

works" - do Your Honours have that, right at the

back? "To manufacture and sell records";

"liability" - the manufacturer, "Level of

remuneration" et cetera - now that is all set out.

"Public performance of published sound recording";

the "Person who causes recording to be heard in

public", they have to pay. "Broadcasting of

Published sound recording", the "Makers of

broadcast, "determined by Copyright Tribunal" they

have to pay. "Sound broadcasts by holders of

print-handicapped radio licences" the licence holder has to pay. "Copying of broadcasts by

educational and other institutions", the body

administering the institution.

So, all the time it is the user who has to

pay; the infringer, in other words. "Copying of

works by educational institutions", the body

administering the institution. "Copying of works

by institutions assisting handicapped readers", the

body administering the institution; "Copying of

works by institutions assisting intellectually

handicapped persons", the body administering.
"Reproduction of pre-1969 work" the makers of the
reproduction. "'Ephemeral' reproductions and

recordings for broadcasts", the maker of the

- record, film or copy.

And then we come to the odd person out, "Use

of blank tapes for private and domestic" purposes,

the vendor of blank tapes, not the user. Now,

Your Honours, we would commend the study of that

paper to Your Honours, but that table does indicate

very sharply the difference. In other words, in

all the other schemes the user is paying.	In this
one it is the non-user who is paying. In

principle, that is why we say it offends, and you cannot use the umbrella of these other provisions

in order to escape that result.

Now, likewise, if individuals use copying

machines in order to copy, there is no way of

controlling that situation at the moment. If

people have copying machines in their homes, there

Tape 175 11/3/92

is no provision that covers that at the moment, as

we understand it. It is only if it is done within

institutions that it is covered.

Your Honour Mr Justice Deane referred my

friend, and he very gratefully accepted

Your Honour's suggestion, to ZZS(3). There are

just a couple of things we wanted to refer to in

relation to that. First of all, "vendor" is

defined in ZZJ:

a person who, in the usual course of his or

her business, sells, hires or otherwise

distributes blank tapes.

It is very odd that it does say "his or her business".

In the Copyright Act, the difference between "person" and "corporation" is fairly well defined

and there is an initial question as to whether "his

or her" should be taken literally or whether this

provision should be read as referring to a

corporation. Of course, if it is to be read

literally, then that is the end of the case

because - certainly the end of our appearance

because we are neither a "his" nor a "her", we are

companies that are vendors. There is that initial

question and it does not seem to us, with respect,

that the Acts Interpretation Act, section 23(l)(a),

necessarily determines that matter in this case

because in copyright the distinction between the

person, the author, and corporations is steadily

kept in mind. For instance, in section 84,

"qualified person" means "citizen, a protected

person" - that is (a) - or ( b) "a body corporate" .

In other words, they go out of their way to cover

it.

Putting that aside, and assuming against us

that it covers us, ZZN is talking about the first

seller who could be an importer or a wholesaler.

"Vendor" then takes up a meaning, we would submit,

referring to ZZN, and where I am leading is this,

that the provision ZZS(3) does not cover retail
sales, that is to say, it does not cover - unless

the retailer is the importer or the first seller in

Australia - a sale by a retailer, so that ordinary

sales across the counter that one might expect are not covered by (3). We get to that because if one follows through these provisions, one finds that

"vendor" clearly in N, P, Q and Rare referring to

a vendor who is the first seller because it is

talking about that vendor. S(l):

Where a prescribed organisation or an exempt

body:

Tape 176 11/3/92

(a) purchases a blank tape from a vendor -

that vendor, we say, is also the wholesaler or the importer. It would be odd if it was not referring

back to R because 5(2) says:

Subsection (1) does not apply where the

prescribed organisation or exempt body

purchases the blank tape from a vendor who is

not liable ..... to pay the royalty in respect

of that blank tape.

It seems to be in the progression of vendor

who is the first seller who has in fact paid the
royalty. When you come to (3), we submit that

vendor means the same thing. There is no reason

for changing the word "vendor" to just cover a

retailer, and so we would submit, with respect,

that S does not answer the question. The

legislators may have intended to, but statutory
interpretation, we would submit, prevents that

interpretation. It simply covers wholesale

sellers.

It may be that under the industry - who knows,

I do not know - but who knows what is in the mind

of Parliament. It may be that in the industry they

were only concerned about large institutions,

prescribed organizations, exempt bodies and such

persons who might buy by wholesale or such persons

or bodies who are in effect like my friend Mr

Catterns' organization, who have, I assume, all or

a lot of the copyright rights, and therefore they
can do what they like with blank tapes without

offending anybody.

So, Your Honours, we would submit that that

aspect of the matter indicates that there is no
consistency about these provisions and there is no

capacity in that law to protect the individual who

buys over the counter from, say, Palings or

somewhere else.

McHUGH J: Except that you have got to read S down,

Mr Ellicott. Vendor is defined in terms quite wide

enough to cover the retailer, and it is significant

that in Pit talks about royalties "payable by the

vendor who first sells, lets for hire". There is

no reference to such a vendor in (3); it is at

large.	The money is payable to the consumer not by
the vendor, but by the collecting society.	The

theory of the section obviously is that the amount

is being passed on down to a consumer who is then

entitled to get a rebate from the collecting

society.

Tape 177 11/3/92

MR ELLICOTT:  But R does not use those words, and clearly it

is referring to a vendor who has a liability to

pay, because it is removing that liability to pay

in certain circumstances. So that vendor there is

not used in any sense other than the vendor in N.

When you come to S, our submission is - and it is

either right or wrong, but we would submit strongly

it is right - that (2) indicates, because it is talking about it not applying where there is no

liability to pay, it is talking about the vendor

who is the first seller. That is our submission,

Your Honours.

I think I have already submitted to

Your Honours that there is no scheme covering

copying in domestic circumstances by individuals in

any situation outside certain institutions; that

is copying of, for instance, I am talking there

about photocopies, xeroxing of copyrighted works

that is covered by universities.

Another matter that my friend did not come to

grips with, in our submission, and it is basic to a

consideration of these provisions, is that there is

no correspondence in effect between what M covers,

the copyright M covers, the type of use to which

the blank tapes may be used or the people who are

to get some distribution under some arrangement

with the collecting society. There is just no

coincidence between all those groups.

As to M, just to be clear, because I do not

think I was terribly clear yesterday as to the
source of the rights of the foreign copyright

owner.	I do not think I made it clear enough to
Your Honour Mr Justice Brennan.	You may have

understood it at the time, but I feel I should take

Your Honour back to section 89, if I may, because I

did not refsr to two subsections and they clearly

are the ones that I should have referred

Your Honour to. Subsection (1) says:

copyright subsists in a sound recording of

which the maker was a qualified person -

well, that is the Australian protects person,
et cetera, or the Australian citizen or the body

corporate incorporated under the law of a

Commonwealth or a State. Now:

Without prejudice to the last preceding subsection, copyright subsists, subject to this Act, in a sound recording if the recording was made in Australia.

So, making in Australia by anybody gives copyright.

Then (3):

Tape 178 11/3/92

Without prejudice -

et cetera -

copyright subsists, subject to this Act, in a

published sound recording if the first

publication of the recording took place in

Australia.

So that a foreign citizen may make it in Australia

or may first publish it here and then, of course,

there may be rights under the conventions,
et cetera, which give people copyright in Australia

in relation to those matters. But, clearly enough,

there is an area there which M covers beyond the

copyright which would attach to the recordings

which are defined as "eligible sound recordings" in

section 135ZZJ.

BRENNAN J: Where does that lead you?

MR ELLICOTT:  Your Honour, where it leads us is that we are

at pains to show that there is no consistency, no

identity, between M, the use to which these tapes

can be put - they can be used for any purpose

beyond copying sound recordings; they can be used

for anything obviously - and then the people who

were entitled to some distribution. They are only

the people who are the owners of the copyright in

an "eligible sound recording" or an "eligible work"

and they are not foreigners if there is no

reciprocal declaration in relation to it under the

provisions of section 135ZZB.

Now, in relation to ZZS, it should also be

clear that it is only dealing with sale; it is not

dealing with letting for hire or distribution, so

that there is no way in which the vendor can

recover. The vendor has to pay in relation to

distribution for trade; has to pay in relation to

- letting for hire; cannot recover at all, whether it

is sale, distribution or letting for hire; might be

exempt if it is to a prescribed organization, but

the vendor cannot get it back, but (3) says nothing

about distribution or letting for hire.

Now, Your Honours may say to me, "Well, in relation to distribution there would not be a

purchaser and therefore nothing would be paid", but

the poor old vendor has no chance of passing it on

and getting it back; it is just part of his

distribution of tapes for the purposes of trade,

but he may get some consideration for letting for

hire, but he has got to put into his business

factor, no doubt, some relationship of the tape to

the royalty that is charged if he wants to pass it

on. He may not pass it on, but if he wants to pass

Tape 179 11/3/92

it on he could. If he does pass it on, then the

lessee is paying something; the lessee may want to

use it for quite innocent purposes, innocent in the

sense of it would not on any view infringe

copyright, but yet cannot get any element of the

amount he pays for the lease of the tape back.

Again, it is just another instance that this

is, if it is a scheme, a pretty haphazard scheme.

We say it is not a scheme; no parts of them are

truly interdependent. There is no doubt that the

legislators had in mind it is a sort of scheme; I

am not saying that, but I am saying that so far as

the provisions are concerned, they do not really

interrelate.

When you analyse it, these provisions are not

really providing compensation for use because those
who receive something do not necessarily represent

those whose copyright has been used. So, it is not

a scheme to compensate for the use of the copyright

for which these tapes might be used, allegedly in

breach, subject to M taking it away.	It is not
compensation for that at all.

One gets the impression that it is a way in

which the government may see fit to institute a

policy that involves giving something back to those

people who are eligible and provide reciprocal

arrangements for Australian composers, but also to

assist the music composition industry generally and
publishing industry generally. It is not a
compensation scheme for the alleged or otherwise

infringement of the copyright involved in the use

of the tapes. Again, there is no interrelationship

in that sense and, as I have already put to

Your Honours, there is no limit to the amount,

except in the Attorney-General's discretion that

might be given to another society such as Ausmusic.

He says 15 per cent in his second reading speech

but, really, the authority for that is contained in

the legislation because there is no requirement

that all the funds go or, say, 85 per cent go to

particular copyright owners.

That just has to be taken into account and the

society can have rules for paying money to others,

no doubt, within the ambit of the objects of that

society but, nevertheless, those payments would not
be for the use of copyright, and that is very much

within the discretion of the Attorney-General. He

might decide, within the confines of this

legislation, that the government has great pressure

on it to help these people who are represented, a

worthy cause, Ausmusic. The government is strapped

for funds. It does not want to make grants through

the Australia Council, or however it does it, so it

Tape 180 11/3/92

says, "Well, these societies are collecting these

funds, why not use it for that?". There would be

nothing to stop that under this legislation. In

other words, it does not have the character of

compensation for infringement of copyright.

Your Honours, could I shortly deal with the question of authorization, as my friend,

Mr Catterns, unlike the Solicitor-General, has

embraced the notion. Could I take Your Honours to the case of CBS Songs v Amstrad, (1988) 1 AC 1013.

Just some short passages in the opinion of

Lord Templeman which was agreed in by all other of

Their Lordships. At page 1053F:

In Monckton v Pathe Freres Pathephone

Ltd. (1914) 1 KB 395, Buckley L.J. said, at

p. 403: "The seller of a record authorises, I

conceive the use of the record, and such user
will be a performance of the musical work."

In that case a performance of the musical work

by the use of the record was bound to be an

infringing use and the record was sold for the

purpose. In Evans v E. Hulton and Co. Ltd.

(1924) 131 LT 534,535, Tomlin J. said that:

"where a man sold the rights in relation to a

manuscript to another with a view to its

production, and it was in fact produced, both

the English language and common sense required

him to hold that this man had 'authorised' the

printing and publication."

And he gives another quote, and then further down

on page 1054, "In Moorhouse", and he refers to what

Mr Justice Gibbs said, and this is a passage that my friend has, we would submit, taken out of its

context:

"a person who has under his control the means

by which an infringement of copyright may be

committed - such as a photocopying machine -	and who makes it available to other persons,
knowing, or having reason to suspect, that it
is likely to be used for the purpose of committing an ·infringement, and omitting to
take reasonable steps to limit its use to legitimate purposes, would authorise any
infringement that resulted from its use."

Now, of course the university had control of the

copying machine and they were allowing people to

use it and they well knew that the machine would be

used to copy works that were in copyright. Now:

Whatever may be said about this

proposition, Amstrad have no control over the

Tape 181 11/3/92

use of their models once they are sold. In

this country the duties of some libraries are

defined -

et cetera. Then he refers to a passage from

Mr Justice Whitford and he goes on to say that what

Mr Justice Kearney of the High Court said in RCA

Corporation - he gave His Honour an elevation which

I am sure he would be happy to have - he said:

"a person may be said to authorise another to

commit an infringement is the one has some

form of control over the other at the time of

infringement or, if he has no such control, is

responsible for placing in the other's hands

materials which by their nature are almost

inevitably to be used for the purpose of

infringement."

this proposition seems to me to be stated much

too widely. As Whitford J pointed out ..... :

"you can home tape from bought records,

borrowed records, borrowed from friends or

public libraries, from the playing of records

over the radio, and indeed, at no expense,

from records which can be obtained for trial

periods on introductory offers from many

record clubs who advertise in the papers, who

are prepared to let you have up to three or

four records for a limited period of

trial ..... "

These borrowed records together with all

recording machines and blank tapes could be

said to be "materials which by their nature

are almost inevitably to be used for the
purpose of an infringement." But lenders and

sellers do not authorise infringing use.

- And we would submit, with respect, that that is

absolutely correct and that His Lordship there is

not throwing any real doubt on what this Court said

in Moorhouse. That statement gets you into trouble

if you apply it literally. It does not apply

literally for the simple reason I have stated.

Your Honours, could I just say something about

taxation. My friend, by the device of faint

praise, was trying to say that we were really

saying it was not a tax.	It is for this Court to
say whether it is a tax.	In Air Caledonie, all the

Court in this case adopted this passage, which is

in 165 CLR 467, having quoted what

Chief Justice Latham had said:

Tape 182 11/3/92

There are three comments which should be

made in relation to the above general
statement of Latham CJ. The first is that it

should not be seen as providing an exhaustive

definition of a tax.

That is a starting point.

Thus, there is no reason in principle why a

tax should not take a form other than the
exaction of money or why the compulsory
exaction of money under statutory powers could
not be properly seen as taxation
notwithstanding that it was by a non-public
authority or for purposes which could not

properly be described as public.

So that is an important proposition.

The second is that, in Logan Downs Pty Ltd v

Queensland -

that is another Logan Downs case -

Gibbs J made explicit what was implicit in the

reference by Latham CJ to "a payment for
services rendered", namely, that the services
be "rendered to" - or ..... at the direction or

request of - "the person required" to make the

payment. The third is that the negative

attribute - "not a payment for services

rendered" - should be seen as intended to be

but an example of various special types of
exaction which may not be taxes even though
the positive attributes mentioned by Latham CJ

are all present.

Your Honours go on to deal with those matters.

That dictum, when read with what

Chief Justice Latham has said, may well incline

Your Honours to say this is a tax, that it is an

imposition, a royalty or a levy, called a royalty,

which is imposed. There are no services rendered,

it is compulsory, and the fact that it is paid to a

non-government, non-public organization and used

for private purposes is not to the point, because
the Commonwealth, through its Parliament, has
ordained that this is a Commonwealth purpose and

that these people are merely the instrument of the

Commonwealth's purpose.

So that the argument about whether it is a tax

should not be seen as something where we are saying

that it is not a tax. It is a matter for the

Court, and there are certain traditional approaches

to taxes, and the fact that the Parliament may not

have intended, as we submitted, to have a tax does

Tape 183 11/3/92

not mean that it is not a tax. A tax is a tax.	If
this is a tax, so be it.

I do not think I need to say any more about

that, except my friend did refer to the royalty

cases. I just remind Your Honours that in Stanton

and Sherritt, the propositions - and these can be
found - I will just give Your Honours the reference
and the pages. Stanton is in 92 CLR 630, at 642,

and Sherritt, 137 CLR 612, at 626 and 630. Those

are the references.

Your Honours, our submission is that those cases make it quite clear that it is a payment by a

licensee to a licensor. If it relates to the sale

or production of a product, then it is a payment by
the person who is licensed to produce the product

by the person who has the authority to allow the

product to be produced and sold, and it relates to

the number of times that the product is sold or

produced. That is the traditional view of a

royalty. What my friend is trying to say here is

quite foreign to it. It may be that overseas they

have called it a royalty, and they would love it to

be a royalty, but it just is not a royalty. It

offends all notions of what a royalty is.

Acquisition:  now, he agrees that copyright is

not extinguished and, we say, that on this basis,

that is, looking at M, the only proper explanation
is that there has been a transfer of so much of the

right to copy as relates to copying recordings in

domestic use. That is how we put our submission,

but I just thought I would restate it in that way

because that is fundamentally what we said and if

my friend concedes and we agree that the copyright

is not extinguished, and remains, then what is

happening is that part of the right is being

transferred to those who have thereafter - which

means everybody - the right to copy.

BRENNAN- J:  I suppose an alternative way of putting it is to

say that if paragraph M truncates the right that is

first granted, then the other provisions to which

exception is taken cannot be regarded as being in

any way compensation for the non-existent right.

MR ELLICOTT: Yes, Your Honour, that is getting to just

terms. We are looking at it, at this point, in

relation to whether it is an acquisition of
property and, we say, it is for that reason, but if

Your Honours do not agree with that, then what

Your Honour has just said, we would agree with.

In paragraph 20.5, at page 5 of their

submissions, they say:

Tape 184 11/3/92

Alternatively, if the rights of copyright

owners are acquired, they are not acquired with a view to any use being made of them.

With very great respect, first of all, those authorities, we would say, do not really say

that - and I am not going to take Your Honours to

them; Your Honours will, no doubt, look at them,

but they do not say that. Quite clearly, they are
being acquired so that they may be used. They may
be used by anybody who wants to use them and that

is regarded as a Commonwealth purpose, apparently.

We have said it is not, but if - I am sorry, we have not said that. We have said that in relation to the other provision. In relation to M, we have

not said it is not. We have said that Mis within the scope of the copyright power, so we would join issue with that. 20.6:

The mere imposition of a pecuniary liability

is not an acquisition of property.

Well, we have said all that we want to say about

that and my friend is trying to use this notion

that, I think, offended Your Honour Justice Dawson

yesterday, that there had been an acquisition of

property. Anybody would call it, in substance, an

acquisition of property and, I would submit, this

Court is not going to allow a judgment to go

through that is going to say that there is a device

for getting around placitum (xxxi) of that nature.

There is an interesting passage in - - -

BRENNAN J:  Mr Ellicott, before you get to the next point,

with reference to M being a law with respect to
copyright, do you challenge the constitutional

validity of M, notwithstanding that?

MR ELLICOTT:  Yes, Your Honour. We say it is an acquisition

of property on other than just terms.

BRENNAN J: And if that argument should fail, do you seek to

bring it down as inseverable from the other

- provisions?

MR ELLICOTT:  We have put that submission, but before that,

if the other submissions go because it is a tax and

section 55 is offended, then we say it goes anyhow

because of the Court's approach - which we do not

challenge - in Air Caledonie, but if, apart from

all that, the other provisions go, then there is

sufficient connection between them. Athough there

is no identify, as we have submitted, there is

sufficient interrelationship between them on the

face of the legislation to conclude that they

should be treated as falling with the others.

Tape 185 11/3/92

In other words, we do not want to produce what

might be thought to be an unfair position on the

face of the legislation. It may not last long if

it remained in that form where copyright owners

just lose their copyright and nothing else happens,

but that is our submission.

Your Honours, in the case of Clunies-Ross,

155 CLR 193 at page 202, there is a passage which

may be thought by Your Honours to describe this

case. Your Honours said this:

It follows that the power compulsorily to

acquire land for a public purpose which is

conferred by the Act is limited to a power to

acquire land for some purpose related to a

need for or proposed use (be it active or

passive) or application of the land to be
acquired. It does not extend to the
acquisition of land merely for the purpose of
depriving the owner of it and thereby

achieving some purpose in respect of which the

Parliament has power to make laws or, in

relation to land in a Territory, a purpose in

relation to that Territory.

Now, it could be argued, and we would argue by

analogy, that what is happening here, in relation

now to the money taken from the vendor, that that
money is being taken for the sake of taking it from

the vendor and then it is being used for some other

purpose for which the Commonwealth can make laws,

that is, to assist copyright owners who have been

deprived of their copyright under M, or some of

them, not all of them, as we have pointed out.

I would submit I am not trying to read too

much into that paragraph by applying it to the

validity of N, P and Q, the royalty provisions, so

far as they involve an acquisition of property.

And, Your Honours, the whole notion behind Part VC,

is the notion that what these people are deprived

of, if Mis being seen that way, as it would on any

view be seen, is worth something. That lies behind

the whole of these provisions and the only reason

why these people, whom I call the foreign people,

do not get anything, is not because of the Berne

Convention, it may be in breach of that, but because of the notion of reciprocity, eligible

foreign persons, but the notion that what they are

being deprived of is worth something is just as

applicable to them as it is to the people who fall within the definition of, if I can use it shortly,

Australian copyright owners, the ones who share in

some sort of loose distribution through this

collecting society.

Tape 186 11/3/92

Therefore, it is to be assumed that if they

get nothing and lose something, as we submit they
do, then at least those who are covered by Mare

not getting just terms and that is enough to bring

the whole provision down. You cannot just divide

it between foreign and Australian copyright owners.

It is just not severable in that sense. It is not

a sensible provision, otherwise than reading it as

it is. So we would submit that, in relation to M,

as we submitted yesterday, that M clearly has no

just terms for those people and then, quite apart

from them, looking at the ones who do get

something, whatever it may be, there is no

proportionality between what they get commensurate

with the amount paid. There is nothing that says

they are to get 90 per cent, or 99 per cent or all

of it. There is nothing, in other words, in the

legislation itself that attempts to put a pecuniary

value as, under the just terms provisions they are

entitled to, there is nothing in there that puts a

pecuniary value on what they lose. So that, for

that reason, also, we would say that M must fall.

Your Honours, I have not dealt with every part'

of the submissions that have been put by

Mr Catterns. He has tried, recognizing the

difficulties of Amstrad and its comments on

Moorhouse, he has tried to suggest that there is

some vague notion around that people who sell

things are somehow connected with this copyright

power because these things can be used. He talks

about the casters and the printers and the like.

Now, if there is anything in that then that would

be extending Commonwealth power far beyond its

limits, in our submission.

Obviously if a printer is involved in some way

in inciting copyright, that is a different matter,

but that just cannot be said here and those old notions, we would submit, when analysed, lie in

that area.

nothing to do with the infringement of copyright. They were not cases where printers had

Your Honours, just one thing that I - because I jumped from M to blank tape vendors and back to M

and copyright owners and dealing with acquisition,

obviously in relation to the blank tape vendors

themselves, then it is our submission, as we have

already submitted, that they just do not get any just terms because they do not get anything. My

friends have tried to build that up as if to

suggest that they get something by way of

commercial benefit, but there is absolutely nothing

to suggest on the face of the legislation or in
common sense or in matters of which Your Honours

may take judicial notice, to indicate that they get

anything which could be called commensurate to the

amount of the royalty so called that they have to

Tape 187 11/3/92

disgorge. Their money is taken and, in truth, they

have nothing to give and nothing to get in return
and on that basis they do not get just terms or

within cooee of just terms. They get nothing. For those reasons, Your Honour, we submit the questions

should be answered in our favour.

MASON CJ: Thank you, Mr Ellicott.

MR GRIFFITH:  May I hand to the Court the copies of the

memorandum between junior counsel I referred to and

read to the Court yesterday?

MASON CJ: Yes.

MR ELLICOTT:  Your Honours, needless to say, I do not mind

Your Honours seeing this, but I do say that the

Court, with respect - - -

MASON CJ:  I think you have made your attitude perfectly

plain.

The Court will consider its decision in this

matter.

AT 11.41 AM THE MATTER WAS ADJOURNED SINE DIE

Tape 188 11/3/92