Donnelly v Hughes
[1999] FCA 1775
•8 DECEMBER 1999
FEDERAL COURT OF AUSTRALIA
Donnelly v Hughes [1999] FCA 1775
COPYRIGHT – proceedings alleging infringements of copyright – where a number of compact discs containing one or more of four sound recordings, copyright of which was owned by a third party company, was in the possession of a company controlled by the defendant - compact discs held for the purpose of distributing the articles for the purpose of trade - where submission of no case made by defendant at close of prosecution case - whether defendant knew, or ought reasonably to have known, the compact discs to be infringing copies of the sound recordings – where various licence agreements, purporting to authorise reproduction and distribution of the sound recordings, made by third parties in favour of defendant, were seized by Australian Federal Police officers at the time of the seizure of the compact discs alleged to be infringing copies of the sound recordings – failure by prosecution to make out case against defendant.
Copyright Act 1968 s 10, s 132, s 133.
Crimes Act 1914 s 5TIMOTHY DONNELLY v HOGHTON HUGHES
QG 169 of 1998SPENDER J
8 DECEMBER 1999
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 169 OF 1998
BETWEEN:
TIMOTHY DONNELLY
ApplicantAND:
HOGHTON HUGHES
RespondentJUDGE:
SPENDER J
DATE OF ORDER:
8 DECEMBER 1999
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The information is dismissed.
2.The informant pay the costs of the defendant of and incidental to the information and summons, including reserved costs, to be taxed if not agreed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 169 OF 1998
BETWEEN:
TIMOTHY DONNELLY
ApplicantAND:
HOGHTON HUGHES
Respondent
JUDGE:
SPENDER J
DATE:
8 DECEMBER 1999
PLACE:
BRISBANE
REASONS FOR JUDGMENT
At the conclusion of the prosecutor's evidence, on a prosecution of a Mr Hoghton Hughes for an offence against the Copyright Act 1968, counsel for the defendant, Mr Hughes, submitted that there was no case for his client to answer.
The amended information, dated 5 May 1999, alleges that:
"…on or about the fifth day of January 1996 at Sydney in the State of New South Wales HOGHTON HUGHES of 7 Satinwood Court, Bardon in the State of Queensland was knowingly concerned in the commission of an offence against a law of the Commonwealth namely, that on or about the fifth day of January 1996 GOLDEN EDITIONS PTY LTD did, contrary to section 132(2A)(b) of the Copyright Act 1968 as amended at a time when copyright subsisted in sound recordings entitled, "Funny Face" by Donna Fargo, "Yellow River" by Jeffrey Christie, "Love Grows (Where My Rosemary Goes)" by Edison Lighthouse, and "Reflections of My Life" by Marmalade have in its possession 1932 articles, namely compact discs for the purpose of distributing the articles for the purpose of trade when it knew or ought reasonably to have known, that the said articles were infringing copies of the said sound recordings."
The particulars of the amended information indicated that there were 1238 articles of a compact disc entitled "Country Music Story" which contained the sound recording "Funny Face" by Donna Fargo, 37 articles of a compact disc entitled "More Aussie Gold - 18 Number Ones" which contained a sound recording "Yellow River" by Jeffrey Christie, and 657 articles of a compact disc entitled "The Super Seventies", which contained sound recordings "Yellow River" by Jeffrey Christie, "Love Grows (Where My Rosemary Goes)" by Edison Lighthouse, and "Reflections of My Life" by Marmalade.
Section 5 of the Crimes Act 1914 relevantly provides that "[a]ny person who…is in any way directly or indirectly knowingly concerned in, or party to, the commission of any offence against any law of the Commonwealth, whether passed before or after the commencement of this Act, shall be deemed to have committed that offence and shall be punishable accordingly".
Section 132 of the Copyright Act 1968 as it was on 5 January 1996 relevantly provided:
"132. (1) A person shall not, at a time when copyright subsists in a work:
(a)make an article for sale or hire;
(b)sell or let for hire, or by way of trade offer or expose for sale or hire, an article;
(c)by way of trade exhibit an article in public; or
(d)import an article into Australia for the purpose of:
(i)selling, letting for hire, or by way of trade offering or exposing for sale or hire, the article;
(ii)distributing the article for the purpose of trade, or for any other purpose to an extent that will affect prejudicially the owner of the copyright in the work; or
(iii)by way of trade exhibiting the article in public;
if the person knows, or ought reasonably to know, the article to be an infringing copy of the work.
(2) A person shall not, at a time when copyright subsists in a work, distribute:
(a)for the purpose of trade; or
(b)for any other purpose to an extent that affects prejudicially the owner of the copyright;
an article that the person knows, or ought reasonably to know, to be an infringing copy of the work.
(2A) A person shall not, at a time when copyright subsists in a work, have in his or her possession an article for the purpose of:
(a)selling, letting for hire, or by way of trade offering or exposing for sale or hire, the article;
(b)distributing the article for the purpose of trade, or for any other purpose to an extent that will affect prejudicially the owner of the copyright in the work; or
(c)by way of trade exhibiting the article in public;
if the person knows, or ought reasonably to know, the article to be an infringing copy of the work.
…
(6) This section applies only in respect of acts done in Australia.
(7) Prosecutions for offences against this section may be brought in the Federal Court of Australia or in any other court of competent jurisdiction.
(8) Jurisdiction is conferred on the Federal Court of Australia to hear and determine prosecutions for offences against this section.
…"
Section 133 of the Copyright Act then provided:
"133. (1) A contravention by a person of subsection (1), (2) or (2A) of section 132 is an offence punishable on summary conviction by:
(a)if it is the first conviction of the person of an offence by reason of a contravention of that section and the article or each article to which the contravention relates is an infringing copy of a work or other subject-matter other than a cinematograph film - a fine not exceeding:
(i)if the person is a natural person - $500; or
(ii)if the person is a body corporate - $2,500;
for the article, or for each article, to which the offence relates;
…
(2) Where a fine is imposed upon a person by virtue of subsection (1) in relation to an offence committed by the person and there is more than one article to which the offence relates:
(a) where the person is prosecuted before the Federal Court of Australia - the fine imposed in respect of that offence shall not exceed:
(i)if the person is a natural person - $50,000; or
(ii)if the person is a body corporate - $250,000;
…"
"Infringing copy" is defined in s 10 of the Copyright Act in the following terms:
" "infringing copy" means:
(a) in relation to a work - a reproduction of the work, or of an adaptation of the work, not being a copy of a cinematograph film of the work or adaptation;
(b) in relation to a sound recording - a copy of the sound recording not being a sound-track associated with visual images forming part of a cinematograph film;
(c) in relation to a cinematograph film - a copy of the film;
(d) in relation to a television broadcast or a sound broadcast - a copy of a cinematograph film of the broadcast or a record embodying a sound recording of the broadcast; and
(e) in relation to a published edition of a work - a reproduction of the edition;
being an article the making of which constituted an infringement of the copyright in the work, recording, film,…"
At the commencement of the hearing of the information, it was admitted on behalf of the defendant as follows:
"1Copies of each of the three (3) named CDs or CD box sets bearing the serial/catalogue numbers specified were seized by the relevant AFP officer from the premises, on the dates and in the numbers specified in the reconciliation.
2All the CDs referred to in the reconciliation were taken from premises owned, leased or under the control of one of Mr Hughes' companies. Mr Hughes directed and controlled the affairs of those companies.
3All those CDs were either owned by or in the possession of Mr Hughes' company Golden Editions Pty Ltd and had been manufactured for that company by third parties at the request of that company by Mr Hughes. Mr Hughes directed and controlled the affairs of Golden Editions Pty Ltd.
4Any material exhibited by Mr Donnelly to his Affidavit and alleged to have been seized pursuant to the search warrants executed in January 1996 was so seized and, where so alleged, belong to or was in the possession of Golden Editions Pty Ltd or its authorised agents."
It was further admitted in the course of the proceedings by the defendant:
"For the purposes of these proceedings the Defendant admits that, at all material times, both he, and by him, Golden Editions Pty Ltd, knew that it was necessary for any person to have authority, by way of licence, assignment or ownership of copyright, to reproduce a sound recording in which copyright subsisted."
As the admissions indicate, copies of CDs containing the four sound recordings referred to in the amended information were taken from premises owned, leased, or under the control of companies in the control of and under the direction of Mr Hughes. The CDs were either owned by, or in the possession of, Mr Hughes' company, Golden Editions Pty Ltd, and had been manufactured for that company by third parties at the request of Golden Editions by Mr Hughes. Mr Hughes directed and controlled the affairs of Golden Editions Pty Ltd.
The evidence, unchallenged in this case, establishes that the sound recordings the subject of the amended information, are reproductions of sound recordings the copyright in which, it is asserted, resided in Dominion Entertainment Inc. The history of the copyright in that company will be referred to shortly. The evidence also establishes that Mr Hughes has been actively involved in the music publishing industry for decades. Some documentation refers to the "Hughes Leisure Group" and other corporations which I infer are part of a group of companies associated with the mass marketing of budget-priced music cassettes and compact discs.
As the fifth admission referred to earlier indicates, it is not in dispute that Mr Hughes was aware of the need to have a licence or other lawful authority to reproduce works, the copyright of which was owned by another.
The essential element of the information, which, in my view, the prosecution is unable to establish on the material before me beyond reasonable doubt, is that Golden Editions knew or ought reasonably to have known that the articles in its possession were infringing copies. It is upon that question that the following reasons will focus.
The evidence establishes that, at the time a large number of compact discs was seized in early 1996, a large number of documents was also seized. In particular, four licence agreements were seized under the search warrant on 5 January 1996. These licences have a direct relevance to the crucial element of knowledge of infringement, and it will be necessary to refer to those documents in some detail.
On the defendant's submission of no-case, I can shortly state that the evidence produced by the prosecution is capable of establishing, beyond reasonable doubt, that copyright subsisted in the four sound recordings identified in the amended information; that that copyright was owned by Dominion Entertainment Inc; that 1,932 articles containing one or more of those sound recordings were in the possession of Golden Editions Pty Ltd on 5 January 1996; that those compact discs were held for the purpose of distributing the articles for the purpose of trade; and that Mr Hughes knew of each of those facts.
The question then becomes whether the evidence is capable of establishing beyond reasonable doubt that Golden Editions knew, or ought reasonably to have known, that some or all of the 1,932 articles were infringing copies of the specified sound recordings, and, if so, whether Hoghton Hughes was knowingly concerned in the possession of those articles for the purpose of trade, with that knowledge.
It is necessary to ask several questions. First, are the impugned compact discs, in fact, infringing copies. Secondly, is the evidence capable of establishing that Golden Editions knew or ought to have known that the articles were infringing copies. If so, it is necessary to inquire as to whether Hoghton Hughes was knowingly concerned in the possession, with that knowledge. It should be said at the outset that there is no difference between the knowledge of the company Golden Editions and its moving director, Mr Hughes.
The case for the prosecution centres on the evidence of Mary Kuehn, the Vice-President and General Manager of Dominion Entertainment Inc. She was concerned from May 1984 until the present with affairs in relation to the existence of copyright and the licensing of copyright in sound recordings in which a number of companies, including K-Tel International, K-Tel Entertainment Inc, and Dominion Entertainment Inc, were concerned.
I have no doubt of Ms Kuehn's capacity to speak concerning copyright matters, having regard to the contents of her affidavit. I should also say that she gave her oral evidence in a forthright way, and more importantly, made concessions where those concessions seemed to be called for, and did not either overstate the evidence or the case with respect to copyright by Dominion.
So far as the crucial questions are concerned, in her affidavit, commencing at paragraph 40, Ms Kuehn dealt with the grant of rights in respect of works in which Dominion and associated companies were concerned, for Australia. In summary, she deposes that three companies, Majestic Products Pty Limited ("Majestic"), Popular Home Products Pty Limited ("Popular") and Castle Communications Pty Limited ("Castle"), had written agreements with respect to sound recordings in which Dominion owned the copyright.
Implicit in the prosecution's case was the contention that only Castle was licensed to manufacture and distribute in Australia articles, the copyright of which was held by Dominion. The relevant agreement was entered into in 1995, and appears as annexure MK30 to Ms Kuehn's affidavit. That agreement was terminated in April 1996.
Notwithstanding contentions that that agreement conferred an exclusive licence for the territory of, in particular, Australia, in my opinion, on its proper construction, it granted non exclusive rights for the term of its existence, in particular, the rights to manufacture, distribute, sell, advertise or publicly broadcast, the performances embodied in the "Dominion Masters" ("the Dominion Masters" being a reference to a catalogue of sound recordings of which Dominion held copyright).
The first clause of the agreement between Dominion and Castle is headed "LICENSE OF MASTER RECORDINGS", and commences:
"Owner [being a reference to Dominion Entertainment Inc] hereby exclusively licenses to Licensee and Licensee hereby accepts from Owner, for the term of this Agreement and for the Territory only:
(a)Each and every master recording which is contained in the Dominion Entertainment, Inc Owned Master Catalog, ...
…"
This grant, whatever it was meant to mean, does not convey an exclusive licence of the rights comprehended by the copyright in the sound recordings, of which Dominion is the owner. This conclusion is, in my opinion, corroborated by the terms of clause 2 of that agreement, which is headed "RIGHTS GRANTED". That clause commences:
"Owner hereby grants to Licensee the rights hereinafter set forth, subject to the following:
(a) The non-exclusive right to manufacture, distribute, sell, advertise, publicly perform and broadcast in the Territory records containing the performances embodied in the Dominion Masters made available hereunder, provided, however, that Licensee's rights shall be exclusive for the Term with respect to each particular compilation of Dominion Masters ("Compilation Records") actually commercially released by Licensee on records in the Territory, except for any such Compilation Records which have been released by any third party prior to the commencement of this Agreement. Prior to releasing any records embodying Dominion Masters, Licensee shall first be obligated to obtain the written approval (not to be unreasonably withheld) of Owner respecting such records, such approval shall be evidenced by a separate Part to Schedule "A" signed by both parties."
The only grant of exclusive licence contained in the agreement, in my opinion, is in relation to the particular compilation of Dominion masters referred to as "compilation records". None of the four sound recordings identified in the amended information is such a compilation. It is unnecessary for present purposes to consider whether the final sentence of clause 2(a) of that agreement is a condition of the licence granted by it, or whether it merely provides for a breach should that requirement not be followed.
In summary, my view is that the agreement between Dominion and Castle did not at the relevant time confer an exclusive licence to Castle in respect of the conduct imputed to Golden Editions.
Further, in her affidavit, Ms Kuehn referred to dealings that Dominion and its predecessors had with Mr Hughes and some of his companies. The effect of those dealings, it seems to me, goes no further than establishing that Mr Hughes had unsuccessfully sought to have a licence directly granted from the owner of copyright in a large number of sound recordings.
It also establishes that he was aware of the need for authorisation before he could lawfully manufacture and distribute recordings, the copyright of which was owned by Dominion. In particular, I should refer to two letters. The first is a letter from K-Tel to Mr Hughes, dated February 4 1992, where the product manager of K-Tel International (USA), Inc, wrote:
"Dear Hoghton:
We are in receipt of your fax dated 15 January 1992 regarding "The Cash Offer We Can't Refuse". Although we do appreciate your offer, we are unable to accept your flat fee arrangement of $50,000.00 for Australian licensing rights to the Key-Seven, Dominion and K-tel catalogs.
We wish to keep your offer on the table should we become dissatisfied with our current licensee in Australia ..."
The second letter is a letter dated 22 March 1994 from a firm of lawyers in Texas to the Hughes Leisure Group. This letter refers to litigation that had occurred in the United States District Court for the Eastern District of Texas, between K-Tel International and a corporation associated with the artist Chubby Checker as applicants, and various respondents, including a Billy Carr.
The letter referred to the judgment which had been given in that litigation. The substance of the judgment was that, while the defendants claimed to have a licence that had been executed between Billy Carr and Mr Stan Shulman, the judge found that that agreement was a forgery, with the consequence that there had been no grant of a licence by the plaintiffs to the defendants. Accordingly, those who claimed any rights through the defendants also held no rights with respect to the copyright which the applicants were held to have owned.
Referring to the substance of the judgment, the lawyers for K-Tel International Inc announced their intention to protect the rights of that company to the sound recordings, and their letter contained an admonishment to take notice of the assertion of their claim. Again, this does not to me demonstrate that there was not a licence, in fact, in relation to the four sound recordings, the subject of the amended information.
However, it is necessary to refer in some detail to the oral evidence of Ms Kuehn. First she was asked by Mr Bain, of senior counsel, who appeared for the defendant:
"Have you gone through the exercise, Ms Kuehn, of identifying who else, other than Castle Communications, had access from K-Tel to the works in exhibit B, the lists within a year prior to 5 January 1996?"
To which Ms Kuehn answered:
"Rights for Australia, yes I did."
She was then asked:
"For anywhere else, no?"
She replied:
"No."
The reference in the question to "the works in exhibit B, the lists", is a reference to the sound recordings comprehended by the Dominion catalogue, which includes the four sound recordings the subject of this prosecution.
Next Ms Kuehn was asked questions concerning licence brokers. Mr Bain asked:
"Ms Kuehn, can I direct your attention to licence brokers. We spoke this morning about people who were, as I put it, intermediaries in the industry. There are people who are licence brokers. That is go out and sell a licence or negotiate the sale of a licence by which someone else can produce copyrighted soundtracks on a CD. That is so, isn't it?"
To which Ms Kuehn replied "Yes". Mr Bain continued:
"And K-Tel itself is a licence broker - by K-Tel, I am speaking, if you will suffer me to do so, collectively of K-Tel International and Dominion. K-Tel itself uses licence brokers?"
Again Ms Kuehn replied "Yes". Finally Mr Bain asked:
"You use, for example, San Juan now, don't you?"
To which Ms Kuehn replied "Yes".
In response to various questions, Ms Kuehn said she had heard the name "Sound and Music", a "United Kingdom Establishment", and that she knew the name "Orcan". And she was asked in relation to Orcan:
"As you understand it, a licence broker?"
To which she said: "Yes".
Then, in a passage which is quite important for the crucial issue on this application, Ms Kuehn was asked:
"Well, so far as someone dealing in the industry was concerned, there were licence brokers, sizeable operations, who deal on a regular basis with these sorts of issues, and offered various catalogues, or lists of recordings, and those included the K-Tel master lists that were exhibit B, didn't they?"
To which Ms Kuehn replied "Yes".
The question contained a number of matters, and it is by no means clear to which part of the question Ms Kuehn's assent was directed. However, the position was clarified by the following exchange:
"So the essence of K-Tel's position here is - and his Honour has before him the precise agreements with Castle Communications - is to say simply because of the Castle Communications agreements no one else should have been allowed to access things that are referred to in those agreements for commercial use in Australia. That is K-Tel's position, isn't it?
To which Ms Kuehn answered:
"Others could have accessed the material from a broker subject to K-Tel's approval of the deal.
Counsel then asked Ms Kuehn:
"Well, depending on the terms on which the broker may or may not have had an arrangement with K-Tel, that is so, isn't it?
Ms Kuehn asked:
"Sorry, repeat that."
Counsel then asked:
"Whether or not K-Tel permission had to be sought, depends on the terms of K-Tel's arrangements with the broker, doesn't it?"
To which Ms Kuehn replied:
"That's correct."
Now, I take this to be a concession by Ms Kuehn that people other than Castle Communication could have accessed the material in the Dominion master list, from a licence broker. That process would have had to be preceded by K-Tel's approval of the power by the broker to licence the copyright in the sound recordings in the Dominion catalogue.
This brings me immediately to the four relevant licence agreements. The claim by Mr Hughes which has been made in this prosecution, and which has been repeated by his solicitor in various correspondence with the Commonwealth Director of Public Prosecutions concerning the prosecution, is that Mr Hughes, or the relevant company, held an authorisation by way of a licence granted by a United Kingdom corporation, which licence agreement covered each of the works referred to in the amended information.
It is important for my conclusion that there is no evidence, in my view, to call into question the authenticity of the licence agreements. It is not suggested that these agreements were shams or are colourable. That question, I acknowledge, is a different question from that which asks whether, in fact, they are valid, but there is no evidence to suggest that these agreements are merely a means of clothing what is known to be unauthorised reproduction with a façade of authority. Each of the agreements was seized at the time the large number of compact discs were seized.
It is also relevant to note that, originally, it was asserted on behalf of the prosecution that there were 185 offending sound recordings. The information and summons as originally filed related to 10 sound recordings, and by amendment, the amended information and summons relates now only to four. That circumstance is not an irrelevant consideration on the question of belief as to the existence of a valid licence or, conversely, with the issue of whether the sound recordings are infringing copies.
The first licence agreement is dated 1 August 1992, and is between Orcan Music Limited, a London company, and Hughes Leisure Corporation Limited, a company with a Brisbane address.
The first clause of that agreement commences:
"The contents of this agreement pertain to the right of the Licensee to manufacture and sell compact discs, cassettes and gramophone records of the musical works listed in the attached schedule to this agreement, this schedule is headed 'SCHEDULE A". The musical works defined in "SCHEDULE A" may be distributed, represented and sold by the Licensee in the following territories:-
Territory : AUSTRALIA and NEW ZEALAND."
Clause 2(b) provides, under the heading "LICENSOR'S WARRANTY":
"Licensor warrants that it owns and/or controls such rights in the Recordings for the rights period and the Territory as to enable Licensor to grant rights to Licensee as provided for hereunder."
Clause 3(c) refers to a non-exclusive right to manufacture, distribute and sell the named musical works for a period of three years from 1 August 1992. It will be necessary to refer to this term of the agreement later. Schedule A includes as the ninth of ten items the words "Hits of the 70s". This is a reference to a compilation of sound recordings which has a notation MARC-759. This compilation includes the sound recordings "Yellow River", "Love Grows (Where my Rosemary Goes)" and "Reflections of my Life", being sound recordings the subject of this prosecution.
The second agreement is dated 3 May 1994 and was made between Orcan Licensing Limited and Hughes Leisure Group. The contents of the contract are similar to the earlier agreement and the Licensor's Warranty is the same. The term of the contract is the non-exclusive right to manufacture, distribute and sell the named musical works until 30 March 1999. Schedule A to that contract includes as the eleventh numbered item of twenty-two, "Country Love Songs", and the evidence establishes that that is a reference to a compilation of sound recordings which includes the sound recording "Funny Face", being one of the sound recordings the subject of this prosecution.
The third licensing agreement is dated 19 July 1994, made between Orcan Licensing Limited and Hughes Leisure Group. The contents of the contract is similar to the previous two, and the warranty is identical. The term of the agreement confers the non-exclusive right to manufacture, distribute and sell the specified musical works until 30 March 1999.
The Schedule A to the agreement has as the first of four items: "2 Australian No 1's (18 tracks each)", and the evidence establishes that that reference is a reference to two compilations of sound recordings which include as one of those recordings the sound recording "Yellow River", referred to in the amended information.
I have referred earlier to the fact that the present information relates only to four sound recordings out of a very large number that had initially been alleged to be infringing copies, and in particular the amended information specifies four sound recordings from the ten sound recordings referred to in the original information and summons. It is in that context that a letter from Minter Ellison, the solicitors for Mr Hughes, to a legal officer in the Commonwealth Director of Public Prosecutions, dated 11 March 1999, is significant. That letter says, in part:
"Under cover of a letter dated 27 November 1998, we provided certain information to Mr David Adsett in your Office regarding our client's licence arrangements with respect to all 185 sound recordings the subject of the seizures and which had been identified in Schedule A to the Search Warrants, on restricted terms but, 'for the purpose of assisting [Mr Adsett] and the Office of the DPP to decide whether proceedings for any offence under the Copyright Act [were] to be brought against [our client]'. Those terms remain in force, but we note that that volunteered information clearly:
(i)stated that our client held a licence over the period 1 April 1995 to 5 January 1996 (the period referred to in the Search Warrants); and
(ii)stated that our client held a licence current as at 5 January 1996 (the date of the alleged offence in the Summons issued subsequently); and
(iii)identified the name of the licensor
for, inter alia, each of the 10 sound recordings ultimately proceeded with in the Summons. The Summons was issued on 7 December 1998 and served on our client on 8 December 1998. At no time prior to the issue of the Summons did anyone from your Office seek confirmation or clarification from this firm or our client of any of the information identified in numbered paragraphs (i) to (iii) above, or otherwise. "
Later the letter referred to makes the following statement:
"Furthermore, your Office has at all times had access to at least 1 licence agreement, namely the 15 March 1994 licence from San Juan Music, which, on its face, clearly identifies that our client had a licence for each of the 5 abandoned sound recordings at all relevant times, namely from 15 March 1994 to 14 March 1997 - the term of that licence."
The letter makes reference to the fact that each of the licence agreements, being those licence agreements to which I have earlier referred:
"...was in the possession of the AFP at the time of our inspection and was available to the DPP prior to the issue of the Summons."
The letter then made detailed reference to the four sound recordings the subject of the amended licence. The letter also noted that in relation to the first of the licence agreements to which I referred, (clause 3 of which stated that the licence was for a period of 3 years), a letter dated 12 November 1998 from Sound and Music Promotions to Mr Hughes was forwarded to the Director of Public Prosecutions. That letter commenced:
"As you know we provided Orcan Licensing with a great deal of material to license on our behalf.
…
There is no question that the agreements were for a five year period and there is no doubt that Orcan Licensing were well aware of this.We seldom issue three year licenses and would not intend our agents to offer such a deal. We have always been happy with five year deals and believe our financial considerations are based on such a term.
If you have three year agreements from Orcan it is apparent that these should have been five year agreements, as agreed."
And later:
"We are sorry that if this oversight may have caused you any embarrassment and hope this communication will rectify the situation."
The compilation, "The Super 70s", to which reference has earlier been made, included as its seventh sound recording: Marmalade, "Reflections of My Life"; as the eighth sound recording: Edison Lighthouse, "Love Grows (Where my Rosemary Goes)"; and as the eleventh sound recording: Jeffrey Christie's "Yellow River".
The compilation "More Aussie Gold - 18 Number Ones" contained, as its fourteenth sound recording, Jeffrey Christie's "Yellow River". The fourth track of disc one of the compilation entitled "Country Music Story" was Donna Fargo's "Funny Face".
Now, it may be that the four sound recordings referred to in the amended information are, in fact, infringing copies, in that, while the licensing agreements purport to authorise one of the companies forming the Hughes Group, to put it in a non-specific way, to manufacture and distribute the relevant sound recording, that authority is, in fact, invalid, in that the licensor does not lawfully have the power to do that which it purports to do, for want of authority from Dominion Entertainment Inc to do so.
However, there is no evidence to establish that that is the case, and further there is not the slightest basis to suspect that either Mr Hughes or Golden Editions Pty Ltd believed that the licensor lacked the authority to do that which the agreement purported to do. The licensing agreements cover the four sound recordings the subject of this information, and in my view the prosecution has not been able to establish on this evidence, beyond reasonable doubt, that Golden Editions knew or ought reasonably to have known that the compact discs containing the four sound recordings specified in the amended information were infringing copies of those sound recordings.
In addition, the prosecution evidence lacks the capacity to establish beyond reasonable doubt that those sound recordings were, in fact, infringing copies. That conclusion is sufficient to dispose of the prosecution. There is corroboration for that view in a letter from the Principal Legal Officer of the Commonwealth Department of Public Prosecutions to the General Manager of the Australian Federal Police, marked for the attention of the Federal Agent who was concerned with the prosecution. Having referred to the original summons relating to the ten sound recordings, the letter continued:
"Hughes asserts that at all material times he operated under licences from companies in either the United States or the United Kingdom.
One such licence is the San Juan licence executed of [sic] 15 March 1994. This includes the following five sound recordings particularised in the summons:
1."Cry" by Johnnie Ray
2."Walking in the Rain" by Johnnie Ray
3."Young Girl" by Gary Puckett
4."Sh Boom" by The Crew Cuts
5."It's My Party" by Lesley Gore"
And the letter importantly continued:
"For the reasons previously set out, it is our view that there is insufficient evidence to prove beyond reasonable doubt that Hughes knew or ought reasonably to have known that the abovementioned five sound recordings were infringing copies. It is therefore our recommendation that the prosecution not proceed in relation to those sound recordings.
It is however our intention to proceed on the remaining titles."
The prosecution proceeded only in respect of four sound recordings of the original ten. The importance of that letter, in my opinion, is the recognition that the conclusion that there was insufficient evidence to prove beyond reasonable doubt that Hughes knew or ought reasonably to have known that the recordings the subject of that agreement were infringing copies, flows from the agreement referred to.
That licence agreement is dated 15 March 1994, between San Juan Music Group in New Jersey, and Hughes Leisure Group Ltd. Clause 1 provides:
"Licensor hereby grants to Licensee the nonexclusive right, privilege and license, for the Licensed Territory only, to manufacture, distribute and sell commercial sound recordings in disc or tape form made from the following master recordings..."
Reference is then made to various artists and tracks in attached schedules. Clause 2 provides:
"Licensor warrants and represents that it owns or controls the rights herein granted in the masters or acts as agent for the owner thereof and has the full and unrestricted right to enter into this agreement."
Each of the schedules to this agreement refers to the title of a particular compilation of sound recordings, and then sets out each of the sound recordings making up that compilation and the artist who performed each sound recording. It is in the setting out of the name of the sound recordings in each compilation that the San Juan agreement differs from the Orcan agreements, to which detailed reference has already been made. That circumstance, in my opinion, is insufficient to differentiate the validity of the authority, or the belief in the authority, that flows from the respective agreements. While I agree that the existence of the San Jan licence agreement is strong evidence pointing to the conclusion "that there is insufficient evidence to prove beyond reasonable doubt that Hughes knew or ought reasonably to have known that [the sound recordings the subject of the San Juan agreement] were infringing copies", the same conclusion reasonably flows from a consideration of the other licensing agreements in respect of the four sound recordings in the amended information.
For these reasons, the prosecution has failed to establish an essential element of the charge, and the information is dismissed.
The prosecution has failed because of the inferences as to knowledge or belief that flow from the licensing agreements. The chain of title has not been established in relation to a licence for each sound recording, but it seems to me that, having regard to warranties by the licensor in each of those agreements, a licensee is not obliged to check the grant of power from the copyright owner to the licensor. It may be in fact that the purported licence is invalid. That possibility, of course, is irrelevant on a criminal charge which requires knowledge (or constructive knowledge) beyond reasonable doubt that the articles in possession were infringing copies. However, I am satisfied that this is a case where, after 11 March, the conduct in continuing with the prosecution is such as to call for the making of any special order as to costs.
I order that the information be dismissed. The informant is to pay the costs of the defendant of and incidental to the information and summons, including reserved costs, to be taxed if not agreed.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Associate:
Dated: 16 December 1999
Counsel for the Applicant: Mr J S Douglas QC with Mr D Boddice Solicitor for the Applicant: Commonwealth Director of Public Prosecutions Counsel for the Respondent: Mr R G Bain QC Solicitor for the Respondent: Clarke and Kann Date of Hearing: 6, 7 and 8 December 1999 Date of Judgment: 8 December 1999
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