Phonographic Performance Company of Australia Ltd v Cattch Pty Ltd

[2013] FCCA 931

FEDERAL CIRCUIT COURT OF AUSTRALIA

PHONOGRAPHIC PERFORMANCE COMPANY OF AUSTRALIA LTD & ORS v CATTCH PTY LTD & ORS [2013] FCCA 931

Catchwords:
COPYRIGHT – Infringement of copyright in sound recordings – where proceedings commenced by collection society – where sound recordings played in restaurant operated by respondents – where no appearance by respondents – where application for judgment ex parte – where damages claimed for loss of licence fees – where additional damages sought – consideration of factors under s.115(4) Copyright Act 1968 (Cth) – assessment of damages – fixed costs assessed – whether to order injunction against second and third respondents.

Legislation:
Copyright Act 1968 (Cth) s.115

Cases cited:
Phonographic Performance Company of Australia Ltd v Advanced Beauty & Body Care Ltd & Ors [2012] FMCA 486

First Applicant: PHONOGRAPHIC PERFORMANCE COMPANY OF AUSTRALIA LTD

Other Applicants: THE PARTIES LISTED IN ANNEXURE A TO THE APPLICATION

First Respondent: CATTCH PTY LTD

Second Respondent: KENT JOHN BELL

Third Respondent: ROBERT RUSHBROOK BRIAN CATTANACH

File Number: SYG 716 of 2013

Judgment of: Judge Raphael

Hearing date: 19 July 2013

Date of Last Submission: 19 July 2013

Delivered at: Sydney

Delivered on: 19 July 2013

REPRESENTATION

Counsel for the Applicants: Mr S.W. Balafoutis

Solicitors for the Applicants: Phonographic Performance Company of Australia Limited

For the Respondents: No appearance

ORDERS

1. The Second and Third Respondents, whether by themselves, their servants, agents or otherwise, be permanently restrained from causing or authorising any sound recordings licensed to the First Applicant (being those sound recordings recorded under the labels listed at being heard in public, without licence of the First Applicant or the respective copyright owner(s).

2. The Second and Third Applicants pay the First Applicant:

   (a)the sum of $2,074.59 pursuant to s.115(2) of the Copyright Act 1968 (Cth) (Act);

   (b)the sum of $60,000.00 by way of additional damages pursuant to s.115(4) of the Act.

1. The Second and Third Respondent pay the Applicants’ costs and disbursements of and incidental to the Application and Application in a case, fixed in the sum of $8,200.00.

2. The proceedings be dismissed as against the First Respondent with no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 716 of 2013

PHONOGRAPHIC PERFORMANCE COMPANY OF AUSTRALIA LTD

First Applicant

THE PARTIES LISTED IN ANNEXURE A TO THE APPLICATION

Other Applicants

And

CATTCH PTY LIMITED

First Respondent

KENT JOHN BELL

Second Respondent

ROBERT RUSHBROOK BRIEN CATTANACH

Third Respondent

REASONS FOR JUDGMENT

1. The applicant is a collection society representing the interests of the owners of copyright in recorded music.  As it is a non-exclusive licensee of that music it is obliged, in order to establish certain of the requirements of the Copyright Act 1968 (Cth)[1], to join as parties the recording companies for whom it acts.  These are the additional applicants in these proceedings. 

   [1] The ‘Act’.

2. Cattch Pty Ltd,[2] was the proprietor of a venue known as The Cavallero.  It was a restaurant situated at 300 Smith Street, Collingwood Victoria.  Whilst the restaurant was operating it broadcast recorded music the copyright in which belonged to the record companies and was subject to the licence to the collection society.  Cattch had never voluntarily obtained a licence to perform the sound recordings, although it did submit an online application form for a licence on 21 July 2012 after receiving correspondence from the collection society dating back as far as 6 June 2008.  On 18 October 2012 Cattch agreed to pay $3,000.00 for arrears of licence fees and promised not to play the recorded music in the future. 

   [2] ‘Cattch’.

3. That agreement was not honoured, and the collection society made some further investigations and inspected the venue on 20 and 21 November 2012 revealing that the repertoire of recorded music remained in use.  Since then there has been correspondence from the collection society to Cattch and its directors but no response has ever been received. 

4. On 8 April 2013 the collection society commenced these proceedings.  Cattch went into liquidation on 30 May 2013 and the venue closed.  The society determined to continue the proceeding against the two directors who it claims were persons involved in the breach of copyright.  Mr Bell was nominated as the primary contact person in the application for the licence submitted by Cattch, Mr Cattanach was nominated as the liquor licensee of the venue and both of these parties were persons who sent emails to the society during the course of the correspondence between them.

5. The application of 8 April 2013 was complemented by a Statement of Claim.   These documents were served upon the second and third respondents, although it was necessary to obtain an order for substituted service upon the second respondent.  The applicant moves on the application and in support has filed the following affidavits:

   a)Lynne Small sworn 11 July 2013;

   b)Jeffrey Dean Robert Bartlett sworn 5 April 2013;

   c)Anna Killick sworn 30 May 2013;

   d)Tom Ross sworn 27 June 2013;

   e)Natarsha Lea Wisewould sworn 4 April 2013;

   f)Sindri Dale Bergsson sworn 11 July 2013 and 18 July 2013.

6. The applicant’s case is articulated in an Outline of Submissions prepared by their counsel, Mr Balafoutis, in his usual thorough and fair manner.  These submissions will be placed with the papers and have been of great assistance to me in preparing these reasons.  To the extent that the submissions make reference to authorities that I have not quoted here, they should be considered to have been adopted by reference. 

7. The evidence reveals that Cattch accepted that the copyright recordings had been played at the venue between June 2008 and 31 August 2012 because it submitted an online application to the society for a licence over that period.  The society also inspected the premises on 23 June 2012 when recordings were being played.  It carried out the further November 2012 inspections when recordings were continued to be played even though a promise had been made that they would not be played. 

8. I am satisfied from the evidence produced that the second and third respondents authorised the infringements by the small proprietary limited company which they controlled; and that they were the persons who, having been informed of the company’s infringements, chose to ignore the applicant’s rights.  The authorities which permit proceedings to be brought against such persons are set out at note 23 to Mr Balafoutis’ submissions.

9. It follows from the above, and I am satisfied, that it was in the power of Mr Bell and Mr Cattanach, the second and third respondents, to control what was occurring.  They could have ceased the playing of the sound recordings.  They could have paid the licence fee arrears and, if they had so wished, they could have arranged for the company to pay for a future licence.  But they did not.  They are liable for the infringements of copyright as much as the company. 

10. The applicant seeks three forms of principal relief against the second and third respondent. Firstly, permanent orders restraining the public performance or the record company’s recordings without the licence of the relevant record company, or the applicant. Secondly, damages pursuant to s.115(2) of the Act in the sum of $2,074.59, being the licence fees that should have been paid from 1 September 2012 until 31 May 2013, and thirdly, additional damages pursuant to s.115(4).

11. The power to award damages and grant injunctions under the Act is found in s.115. The matter which requires most serious consideration is the amount of additional damages. The applicant argues that permanent orders are needed because it is very possible that Mr Bell and Mr Cattanach will become the proprietors of some other restaurant, or similar activity, in Melbourne in the future and they will seek to perform music in such a venue that requires the licence of the recording companies or the collection society. If they do not obtain a licence then the existence of a permanent order will bring them into contempt, which is an appropriate sanction in matters of this nature. Damages, under s.115(2) have been calculated on the licence-fee basis which is common in these matters and in respect of which the relevant authorities have also been provided by Mr Balafoutis in his submissions.

12. In coming to a view as to the proper quantity of damages to award under s.115(4), the court is obliged to take into account a number of matters. The first being the flagrancy of the infringement which, as Mr Balafoutis notes, includes deliberate and calculated copyright infringement. In this case there can be little doubt that the respondents have deliberately infringed the copyright of the record companies. They were made well aware of the existence of the copyright and the requirement to be licensed as long ago as 2008 and yet they continued to utilise the music and never paid a licence fee. The evidence reveals over 20 separate telephone calls or letters from the society to the respondents notifying them of their obligations. These obligations were acknowledged but were not honoured.

13. The second matter is the need to deter similar infringements of copyright.  The evidence reveals that this is the first such application against a restaurant as opposed to a nightclub or other performing venue.  It is notorious that restaurants utilise music in their venues for what is considered to be by some the convenience of customers and by others an interference with their right to carry on quiet and responsible conversation.  There is a need, according to the society, to send a message to other venue owners that if they wish to broadcast or play recorded music the copyright in which belongs to others, then they must obtain permission and pay the appropriate licence fees. In Ms Small’s affidavit she states that the public performance of protected sound recordings without a licence has become an endemic problem in the recording industry.  No one has come to this court to refute that. 

14. The next matter the court must consider is the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright.  The evidence in this case reveals that although these respondents and the company they operated were made aware of their obligations in 2008, five years later nothing has been done other than to continue to utilise the recordings without licence.  It is true that the company agreed to enter into an arrangement with the society, but it was an arrangement it did not honour.

15. The fourth matter, found under s.115(4)(b)(2), is not relevant in these proceedings. The fifth is whether any benefit is shown to have been accrued to the defendant by reason of the infringement. In my view, the defendants did obtain a benefit. They were able to utilise recordings licensed by the society without payment. Another restaurant which did act in accordance with the law would have made a payment and would, therefore, have had an additional charge against its profits.

16. The final matter is whether there are any other relevant matters. It is submitted by the society that four matters are worth noting. First, if no order for additional damages is made against the respondents, other than legal costs, they will have suffered no real penalty for refusing to pay the licence fees for a period of over five years. Second, neither of the respondents have expressed any contrition for what they did. They have not appeared in court. They have effectively buried their heads in the sand. Thirdly, the applicant says that the respondents were advised of the seriousness of the possibility of an award under s.115(4) and so, had an opportunity to make representations to the court. Finally, the society makes reference to the matter just adumbrated namely, the respondents’ non-attendance.

17. This court has now had some considerable experience in assessing damages under s.115(4). Mr Balafoutis, in his submissions, has provided a helpful digest of those decisions. Based upon that digest, he suggests that an appropriate figure is $70,000. He says that in a case heard before Driver FM, as he then was, and known as Phonographic Performance Company of Australia Ltd v Advanced Beauty & Body Care Ltd & Ors [2012] FMCA 486, an award of additional damages in the sum of $50,000.00 was made. In that case, the playing of sound recordings occurred in beauty salons.

18. It is submitted that the award in this case should be higher than that because of the greater importance attached to the playing of music in restaurant as against a retail store. It is shown to me that the society charges a very different tariff for the two venues. A retail store is apparently $100.00 a year and a small restaurant is $2,500.00. I have taken note of all the matters required under s.115(4) and of the submissions made as to the amount of the penalty. In my view, something more than $50,000.00 is probably appropriate but I would not go so far as to make it $70,000.00 as suggested by the applicants.

19. The orders that I propose to make are those contained in the draft short minutes provided by the applicant, which I have amended so that order 2 is that the second and third respondents pay the first applicant the sum of $2,074.59 pursuant to s.115(2) of the Act and the sum of $60,000.00 by way of additional damages pursuant to s.115(4). I also note that the applicant had requested that its costs be assessed in the sum of $8,200.00. I believe this is a reasonable figure given the work that was undertaken by the applicants and I am prepared to make an order in those terms. I make orders in accordance of the short minutes amended in blue, initialled by me and placed with the papers.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Associate: 

Date:  25 July 2013