Pontello v Giannotis

[1989] FCA 680

CATCHWORDS

Copyright - defendant charged with havlng in his possession films, in whlch copyright subsisted, for the purpose of letting the films for hire or, by way of trade offering or exposing them for hire - films infringing copies of owners1 copyright - whether defendant knew or ought reasonably to have known that the films were infringing copies.

Copyright Act 1968, subsec. 132(2A)

Copyright - defendant convicted of an offence under subsec. 132(2A) of Copyright Act 1968 - consideration of appropriate penalty.

Copyright Act 1968, ss. 132, 133.

Crimes Act 1914, S. 20

Sydney-

JOHN PONTELLO V. DENNIS GIANNOTIS

NO. NG64 of 1989

Sheppard J.
25- and 26 July 1989

IN THE FEDERAL COURT OF AUSTRALIA	)	,
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NEW SOUTH WALES DISTRICT REGISTRY	1	No. NG64 of 1989	I ..
1	7 ,
GENERAL DIVISION	)

BETWEEN:

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JOHN	PONTELLO	i
Prosecutor	.	~

AND :

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DENNIS GIANNOTIS
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Defendant

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NINUTES OF ORDER	I. :
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.	CORAM: SHEPPARD J.
DATES : 25 and 26 JULY 1989

PLACE: SYDNEY

THE COURT ORDERS THAT:-

1. The defendant be convicted for an offence under subsec. 132(2A) of the Copyright Act 1968.

2. Pursuant to S. 20 of the Crimes Act 1914 the defendant be released without sentence being passed upon him on his entering into a recognizance in the sum of $1,000 that he will:-

(a)	be of good behaviour for a period of three (3) years from today;
(b)	on or before 31 August 1989 pay to the informant the sum of $6,500 for his costs of the prosecution.

3. Pursuant to S. 133(4) of the Copyright Act 1968 there be delivered up to the Australasian Film and Vldeo Securrty	, .
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Office for delivery to the varlous copyright owners the video films llsted in the schedule inltlalled and dated by Sheppard

J. and placed with the papers.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY	) No. NG64 of 1989 I

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GENERAL DIVISION !

BETWEEN:

JOHN PONTELLO

Prosecutor . .

AND :

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DENNIS GIANNOTIS	. .
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Defendant	8 -
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CORAM: SHEPPARD J.

DATE : 25 JULY 1989

REASONS FOR JUDGMENT

HIS HONOUR: In this matter the defendant is charged with an offence under subsec. 132(2A) of the Copyright Act 1968 ("the Act"). So far as it is relevant, the subsection provides that a person shall not, at a time when copyright subsists in a work,

exposing for hire the article, if the person knows or ought	have in his or her possession an article for the purpose of, inter alia, letting for hire or by way of trade offering or
reasonably to know the article to be an infringing copy of the work. The charge is that the defendant did, on or about 31 May 1988 at Harris Park in the State of New South Wales at a time when copyright subsisted in the works, namely the cinematograph films entitled - and then follow 97 films - have in his possession such films, namely pre-recorded video cassette tapes

of them for the purpose of lettlng for hlre the artlcles which he knew or ought reasonably to have known to be infringing coples of each of the sald works. The number of fllms involved is not 97 but rather, 67. Nothing turns on thls.

The principal issue in the case is the question of knowledge. Until 1986, when the Act was amended, a prosecutor in the position of the prosecutor here had to establish beyond reasonable doubt that the defendant knew, that is to say actually knew, that the article in questlon was an lnfringrng copy. Now it is sufficient if he proves instead that the defendant, if it cannot be proved that he actually knew the article to be an infringing copy, ought reasonably to have known that it was. I believe that there has not previously been a prosecution in this Court under S. 132 since the amendment.

The amendment, or at least the Bill for the amendment, was introduced into the House of Representatives in 1986. Amongst other things the Attorney-General, in his second reading speech, said (Hansard, House of Representatives for 21 May 1986 at p.

3668):-

unscrupulous dealers are not able to rely	"The Government wishes to ensure that
upon technical arguments to avoid proper liability. The proposed introduction of the words 'or ought reasonably to know1 is intended to make clear that a person will not escape criminal liability by disregarding circumstances which would lead any reasonable person to conclude that the copies with which he or she is dealing are pirate copies. ..."

The explanatory memorandum whlch accompanied the B111 sald in

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para. 43:- ; : I

"It is currently requlred that the offender 'knows' that the copies in whlch he 1s dealing are infringing copies. This knowledge test is to be amended to: 'knows or ought reasonably to know . . . I . Thus it is lntended that a court may have regard to the circumstances of the alleged crlmlnal act to determine whether the accused 'ought reasonably' to have known that the coples dealt with were Infringing coples."

Counsel referred me to some authorities, two on the section as it was previously and another in relation to an entirely i

different provision.	The matter was considered by Matheson J. of	I
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the Supreme Court of South Australia in Hooi v. Brophy (1984) 71	I_
F.L.R. 338. His Honour said (p. 340) that there was no
definition in the Act of the word, "know", which appeared in the	+
section under which the appellant was charged nor was there any	1
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argument as to its meaning before him.	He referred to what he

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described as a useful discussion of the word, "knowledge", by	;
Devlin J. (as he then was) in Taylorls Central Garages (Exeter)	i

Limited v. Roper [l9511 w.N. (Eng.	) 383. His Lordship there sald	!
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(p. 385):-

"There are, I think, three degrees of knowledge which it may be relevant to consider in cases of this sort. The first is actual knowledge, and, of course, the ]ustices may find it because they infer it from the nature of the act that was done, for no man can prove the state of another man's

mind; and they may find it, of course, even if the defendant gives evidence to the contrary. They may disbelieve him, and think that that was his state of mind. They may feel that the evidence falls short of that, and, if they do, they have then to conslder

what might be described as knowledge of the second degree: they have to conslder then whether what the defendant was doing was, as lt has been called, shutting his eyes to an obvlous means of knowledge. Varlous expressions have been used to describe that state of mlnd. I do not think it necessary to look further, certainly not in cases of this rype, than the expression used by Lord Hewart C.J., in a case under this section, Evans v. Dell (1937) 53 T.L.R. 310, at 313,

l . . . the respondent deliberately refrained

'from making inquirlesf the results of whlch
he mlght not 'care to haver'.

The third sort of knowledge is what is generally known in the law as constructive knowledge. It is what is encompassed by the words 'ought to have known1 in the phrase 'know or ought to have known'. It does not mean actual knowledge at all: it means that the defendant had in effect the means of knowledge. When, therefore, the prosecution's case is that the defendant fails to make what they think were reasonable enquiries, it is, I think, incumbent upon them to make it quite plain which of the two things they are saying. There is a vast distinction between a state of mind which consists of deliberately refraining from making enquiries, the result of which the person does not care to have, and a state of mind which is merely neglecting to make such enquiries as a reasonable and prudent person would make. If that distinction is kept well in mind I think justices will have less difficulty than this case appears to show they have had in determining what is the true position. The case of shutting the eyes is actual knowledge in the eyes of the law; the case of merely neglecting to make enquiries

legal conception of constructive knowledge,	is not knowledge at all - it comes within the
which is not a conception which, generally speaking, has any place in the criminal law."

In the Hooi case Matheson J. went on to refer to the decision of the Court of Appeal in New South Wales in R.C.A. Corporation v. Custom Cleared Sales Pty. Limited (1978) 19 A.L.R. 123. That was a civil case but based on provisions of the Act similar to those in question here before their amendment. In a joint

judgment Hope, Reynolds and Hutley JJ.A. sald (p. 126):-

"A judge is entltled In Inferring knowledge

to use his assessment of the person with whom he 1s concerned; facts from whlch knowledge would readily be inferred in the case of an adult may well not be sufficient in the case of a child. It seems to us that the principle is more accurately put by saylng that a court is entitled to lnfer knowledge on the part of a particular person on the assumption that such a person has the ordlnary understanding expected of persons in his line of business, unless by hls or other evldence it is convinced otherwise. In other words, the true posltion is that the court is not concerned with the knowledge of a reasonable man but is concerned with reasonable inferences to be drawn from a concrete situation as disclosed in the evidence as it affects the particular person whose knowledge is in issue. In inferring knowledge, a court is entitled to approach the matter in two stages; where opportunities for knowledge on the part of the particular person are proved and there is nothing to Indicate that there are obstacles to the particular person acquiring the relevant knowledge, there is some evidence from which the court can conclude that such a person has the knowledge. However, this conclusion may be easily overturned by a denial on his part of the knowledge which the court accepts, or by a demonstration that he is properly excused from giving evidence of his actual knowledge."

The evidence in this case was in the main given by Detective Sergeant Carlin who is a detective sergeant in the Australian Federal Police and Mr. S.H. Howes, who is the Regional Director of the Australasian Film and Video Security Office. That organization attempts to police the Act on behalf of the copyright owners of films. It is particularly concerned with the piracy of films which occurs in the video industry. Mr. Howes has had long experience in investigating cases of piracy and the

detall of hls experlence is set out in hls affidavit to which I need not refer further ln that respect. I accept, of course, what he has said about hls experlence.

The evidence of Detective Sergeant Carlin establishes that on 31 May 1988 he went to 67 Marion Street, Harris Park, a Sydney suburb, accompanied by an officer of the Security Office (not Nr. Howes) and some other police officers. He had a search warrant with him and a search of the premises was conducted. The defendant was not then present in the shop. At about 2.00 p.m. there was a telephone call. Whilst Detective Sergeant Carlin was speaking on the telephone the defendant came Into the shop. This was about 2 o'clock in the afternoon. Detective Sergeant Carlin identified himself and said to the defendant, "I have a search warrant to search these premises". He then gave him the usual caution. The defendant said that that was all right and that Detective Sergeant Carlin must do hls job. Detective Sergeant Carlin told the defendant that his, that is to say the defendant's, solicitor had asked him not to talk to the defendant that day. He asked him whether he was prepared to come down to

his office. He said he would like to ask him some questions	about videos, stickers and labels that had been seized.
About this time a l?r. Kounavis entered the shop and was introduced by the defendant as his partner. Mr. Kounavis said
that he did not speak much English but Mr. Kounavis apparently
understood what was going on. Eventually Detective Sergeant
Carlin provided a copy of property lists to the defendant before
leaving the premises. The property lists are in evidence and
nothing turns upon them. The police officers left the premises !

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at about 2.45 p.m.

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On 2 June 1988 the defendant attended for an interview which was conducted in part on that day and continued on the following day. The record of Interview is in evidence and I shall refer to some of the detail of it in a moment. It was admitted wlthout	8 .
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objection, except as to one part of it, which I admitted over the
objection of counsel for the defendant.
Detective Sergeant Carlin then referred in his affidavit to the various items which had been shown the defendant during the interview. These are all in evidence.
The record of interview comprises some 228 questions and answers. A great deal of it is Important but it is inappropriate that I should refer to the entirety of it in these reasons. It should be understood though that it needs to be read as a whole and that is how I have approached dealing with it. Questions were asked the defendant by Detective Sergeant Carlin of his employment history. Nothing of relevance emerged until he said	that he had been engaged in dressmaking between 1975 and 1979 and	that in 1981 he started "video" and added, "and I do a little bit
making to." Whether the making referred to dressmaking or to
c,.

something else does not appear.	The interview proceeded with	1	:	,
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questions 2 4 to 28 which are as follows:-	1.
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" 4 2 4 . By that do you mean you started the video shop and made video tapes?

A. I do a little bit of dressmaking and I

open the vldeo shop in Wollongong. I only had Greek movles in wollongong nothing else I do alrlght there and after about one year I close and open up at Harrls Park at 53b Marion Street, I open another one in Liverpool ln Scott Street, Greek movles not American movres and I sell lt after t h ~ s .

Q25. When dld you close 53b Marlon Street,

Harrls Park?

A. I close about three years ago, I can't remember exactly.

Q26. When did you close Scott Street,

Liverpool?

A. I dldn't close it I made a contract with a man I give him the shop and he give to me some Greek movies, I had it less than one year.

Q27. what is the name of your business at 67 Martio Street, Harris Park?

A. Athena Video.

428. Do you own that business?

A Me and George.

429. Is that George KOUVANIS?

A. KOUNAVIS."

The defendant went on to say that the business was with mostly Greek movies and some American movies and then added established in June three years before. He said that he started

new releases and got more. He sald that he and Mr. Kounavis were

equal partners and had provided equal cash. Mr. Kounavis has not been charged with any offence arislng out of the events in question here.

In the course of the search which was conducted on 31 May

1988 the police officers took possession of a large number of

video tapes. Many of these are the sublect of the present

charge. There is no issue between the parties that copyright	:
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subsisted in each one of them and that each of the copies 1s an
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infrlnglng copy. t

The principal question is whether I should be satisfied to the requisite standard that the defendant elther knew, or ought reasonably to have known, each of the copies to be an lnfrlnging copy of the work in question. A subsidiary issue 1s whether or not I should be satisfied that the defendant had the coples in his possession. The basis of the submission about this matter was that the evldence does not enable one to tell whether the films in question were acquired by Mr. Kounavis or by the defendant and that some of the answers given in the record of interview suggest that the business was run by each partner on alternate weeks. In other words, one week the defendant would run it, the next week Mr. Kounavis would run it and films might be acquired by either of them. It was said that there was no satisfactory evidence to enable one to tell whether the films the subject of the charge had been acquired by the one or the other partner.

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I think the submission overlooks the fact that each partner is himself or herself in possession of the partnership property, the partnership assets and the partnership business so that the possession of one is the possession of the other. On that basis

I think that the submission based on possession should be

rejected and I reject it accordingly. That then disposes of the question of possession and leaves the question of knowledge which

is the critlcal question in the case.

In order to deal with the evidence about that matter it is necessary to refer further to the record of interview and to some other evidence. Detective Sergeant Carlin asked the defendant about his experience in the video industry, about hls knowledge of pirate movies and about copyright. At an early stage of the lntervlew the defendant told Detective Sergeant Carlln that he had had seven years experience "with Greek movies before and then the American movies for about three years". He said that he knew the term pirate movie and said that he understood it to mean something illegal. The interview continued:-

"454. If I said I had a pirate video tape what would you understand that to mean?

A. It is something illegal.

Q55. Do you know that the producers of movie films have copyrights to the film?

A.55 I don't know anything about this.

456. Do you know that each movie company has its own trade mark?

A56. Yes some have CBS Fox and some have RCA

and there are others.

457. Do you know that it is an offence to use some other company's trade mark, without that companies authority.

A. No I don't know nothing about that.

458. Do you know that it is an offence to make a copy of a video film without the owners of the copyright permission?

A. I don't know anything about copyright.

The Video Star Greek Company Melbourne sell to me movies and the same movie is sold to me in Sydney by FINOS (Spelt) Film I don't ask them about copyright I just buy them."

Later in question 122 Detective Sergeant Carlin asked the defendant about what he described as a message which he had shown	-
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the defendant on a sticker bearlng what he described as the CBS
Fox logo. The sticker said:-	j. I

"Warning. The copyright proprietor has llcensed the fllm contained in thls video cassette for prlvate home use only and prohibits any other use, copylng reproduction or performance in publlc, in whole or part."

The defendant said:-

"This shows that it belongs to CBS and you can't copy it, it belongs to them I see it, I don't copy it."

He was asked where he got the labels and said from a man named Mlmo. I shall refer to evldence about Mr. Mlmo in a moment. He was shown some further silver labels which apparently came from Mr. Mimo and said:-

"Mimo gave them to me they are used to cover the corner of the video so you can't copy them. "

Towards the end of the interview the defendant was shown a five page letter written by a firm of solicitors, M. Rosenblum and Company, on 1 April 1986. It is a not uncommon letter sent by solicitors to a suspected infringer of copyright informing him of their client's rights and warning him of the consequences of infringement. The letter is in evidence but I do not need to refer to it further.

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Detective Sergeant Carlln asked the defendant whether he agreed that the letter contained lnformatlon concerning the fact	1. :
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that it :ras an infringement of copyright to make a copy of a film	i
wlthout the llcence of the copyrlght owner. He said:-

"I have plenty of letters like this. I get letters from two three or sometimes four sollcltors all saylng the same thlng for

different companies, I don't make copies all
the time I buy copies if I buy coples I don't

get in trouble for maklng them."

The interview proceeded:-

"Q208. Are you aware of the penalties involved for hiring, selling or exposlng for sale or hire cassettes when you ought reasonably to have known that the cassette was an infringing copy, that is, a pirate copy of a video film.

A. No I don't know."

The first conclusion I draw from a consideration of those

various answers to the questions whlch Detective Sergeant Carlin

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asked is that the lnltial answers of the defendant that he was

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unaware of the significance of pirate copies and copyrlght and so	:.
forth did not, to say the least, reveal the entirety of his	I!
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knowledge. It seems to me, as indeed one would expect in the case of the operator of a video store who has been in the video	5
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business for some seven years, that whilst unversed in the	::
intricacies of this branch of the law, the defendant had a sufficient knowledge to guide him in what he might do legally and what he might not. Apparently he had had substantial numbers of
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letters from solicitors setting out the provlslons of the Act insofar as they referred to clvll llabllity as dlstinct from crlminal liability but their effect is little different. It seems to me that the protestation of lack of knowledge which appears in the early part of the Interview is overcome by what later appears and that lndeed the defendant has a famillarlty, which as I say one would expect, with the position which he at first professed to disavow.
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I should then turn to questions and answers in the interview which relate to the acquisition of the films. Detective Sergeant	I r
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Carlin asked the defendant whether he knew a person named Mimo	. .
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Cesselli. He said that he did not know his second name. By that

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I take him to mean that he knew the man by the name Mimo rather -,

than Cesselli.	He said that he had met him at a firm, Hollywood	l.,
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Films, early in 1987 where the defendant was waiting to pick up	, .
some new releases. According to the defendant, Mimo said to

"I am Mimo from Greystanes Video; we talked

about some videos I told him my name and that

delivered some to me, his partner was a Greek	had Greek movies because his partner had	I had Harris Park Video he told me he knew I
from Cyprus I can't remember his name but I have heard that they separated and his partner bought a paper shop. Whilst Mimo was there I spoke to Bob about some videos I had stolen."

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By that he meant that somebody had stolen videos from him, not	5 ,
that he had stolen the videos.	He continued:-

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"I asked him if there was anything he could	!
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do to replace them, he sald he couldn't help me, Mlmo sald don't worry 1'11 come and see you at your shop."

was apparently an employee at Hollywood Films. Mlmo came to the shop about three or four days later. He asked how many videos the defendant had, how many he had lost. He was told three or four. The defendant showed hlm the dust covers and mimo said:-

~ o b

"No worries grve them to me and after I'll
bring them back."

About three or four days later Mimo came back with the covers and the tapes. The defendant said to him:-

"Al00. What did you do, he sald don't ask me

questions you're happy, I say of

course I'm happy, how much cost, he said nothing only if you like to swap some of your movies for some of my movies, and after that we started to swap some movles.

Q101. How often did Mimo come to your shop?

A101. Sometimes he would come to my shop

would say you have some good movies

and say he was just passing and come in for a cup of coffee, sometimes he

here, I would say yes I just got some new releases from Hollywood Films, he would say I wlll give you this movie and you give me this movie, one of the new releases, I said what are you doing you take my new release worth eighty dollars, your one is old and only worth forty dollars, he would say no worries I will give you some videos and you can work them until I bring you some more."

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The defendant sald that nimo had given hlm new releases many

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times. Every month he would come and pick up maybe two, three, four and also some older titles.	I
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He said that thls had been

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going on for perhaps one or one and a half years and more information was given about the defendant's dealings with nimo to

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which it is unnecessary to refer, except in relatlon to labels.	,-
The defendant sald that labels shown to him, which were
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identified as Roadshow Home Video face labels and in respect of which the defendant said they were for copyright, the same as CBS
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and the others. He said that he got them from Mlmo and he
identified other labels which he had received from Mimo as well.	.,...
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He said that Mimo had given him labels, "Plenty times, with a cassette." He never paid him for labels. He denied that Himo
had-told him that he could use the labels to make extra copies of	, .
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vrdeo films at a cheaper prlce and he went on to indicate the	i
numbers of videos that he had had.
In addition to seizing films from the premises on 31 nay 1988 the police officers took some equipment which is depicted in
Sergeant Carlin8s affidavit sworn on 1 Hay 1989. Four of the	photographs which are exhibited and marked "RC2" to Detective
photographs were admitted into evidence over the objection of counsel for the defendant. The equipment is described in the evidence and is commonly used for copying video tapes. The basis of counsel's objection to the admission of the photographs and the reference to the seizure of the equipment in evidence was that the defendant was not charged with an offence relating to having that sort of equipment in his possession. That, of course, 1s perfectly true, but it seemed to me that the existence of the equipment in the shop and the answers glven in relatlon to it by the defendant in the course of the interview provlded some evldence relevant to the questlon whether he had been shown to have the necessary knowledge.
In the course of questioning the defendant about the labels Detectrve Sergeant Carlin asked him whether he had used the labels to make coples of vldeo fllms. The defendant denled this.
Detective Sergeant Carlin said that when they visited the shop on
Tuesday - that is to say, 31 May 1988 - he saw two video machines connected wlth an image enhancer. He put it to the defendant that he used the machines to produce pirate copies of video films to which he attached the labels provided by Mimo and asked the defendant whether he wlshed to comment. The defendant's answer, number 109 was:-

"No I did not use them to make copies, the enhancer I borrowed in 86 to copy Greek films because only one shop in I?arrickville had Greek movies and he would not sell them to us so I bought the machines to make copies."

Road, Botany and video machines from a firm, Bing Lee, at	He said that he had bought the machine from a shop in Botany
Cabramatta, about six months beforehand.

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According to Mr. Howesr evidence, which in this respect I also accept, the equipment is usually used and only used for the	I
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purpose of copying videos. To me the relevance which that
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evidence has is not associated with any question whether the

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defendant was uslng the machine for copying or not; it slmply	I
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goes to show that he knew full well that there are means of	. .
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copying videos and indeed had copied them himself on occasions
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and had the means of copylng in his shop. That evidence coupled	% ,
with the answers to which I have earlier referred about his	. . . .,
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knowledge of copyright and of plrate copies, when put together, reinforces my conclusion that he had a good working knowledge of the realltles of working in the vldeo industry.
Mr. Howes gave evidence in whlch he referred to each of the videos which is in question pointing out, upon the basis of his experience, the reason why one would suspect that the video was a pirate copy. He was aided in this exercise by his notes which he had taken at the time of the police search. A copy of the relevant parts of his notes was made available to me as exhibit B and it summarises the various vldeos and the slgns on the tapes which would lead an experienced person to suspect a pirate copy.
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I should say two things about that evidence.	Firstly, Mr.	,,..
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Howes has had a vast experience in this area and is well versed	I	I
in detecting signs of plrate copies.	The knowledge he has ought	F:

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not necessarily be imputed to the defendant. Indeed, it would be l

wrong to impute it to him. The second thing is that the signs

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upon which Mr. HOWeS relies are not signs that in fact the film	!
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itself is a pirate.	The only way of determining whether the film	i --
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is a pirate is to play it; perhaps on an ordinary video but more	, .,
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desirably on more sophisticated equipment.	Even then, as I	1 ;
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understand it, one would need an experienced eye to determine for	i: i _	;	- >
certain whether particular videos were pirate copies or not, but
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the polnt of Plr. Howes' evldence is thac there are numerous signs, some quite apparent to the naked eye and to people not particularly versed in decectlon of pirate vldeos, whlch should alert the person looklng at the cassette box or cassette cover that it is llkely or entlrely posslble that the tape which it contalns is counterfelt.
One of the matters which is looked for in relatlon to a number of makes of tape is a security label which appears on one of the windows of the cover of the tape. Sometimes the securlty label is silver and sometimes it is blue. Not all companles use securlty labels but many do and many of the coples in question here lack security labels. The security labels are difficult to remove but may apparently be removed with the aid of an article such as a hair dryer which blows warm alr on to the surface of them. It is Mr. Howesl evldence that one would be immediately suspicious if one saw a video tape wlthout a security label. This would be a first sign tht it might well be a pirate copy.
There are other indications. Some companles make cut-outs of various shapes and sizes in their ordinary labelling elther on

face or spine labels. A tape that had a label that was

apparently genuine but with no cut-outs would be suspect. Then pirates apparently have difficulty in precisely copying some labels, whether face or spine, with the consequence that the label compared with the genuine label looks washed out or faded.

Some of the examples in evidence are more striking than

others. Some show badly cut labels, photostat labels or labels

taken from advertisements and there are other lndlcatlons as nr. Howes' oral evldence and exhiblt B demonstrate; but to me, having listened to the evidence and of course it does not apply in every case, the absence of a securlty label is the most significant

indication of probable plracy that there is.

I should refer to some further evidence which was given by

Mr. Howes firstly in his affidavit and then in hls evidence

today. He sald that from records malntalned by hlm he was able

to say tht he had previously been to the defendant's premlses on

Monday, 30 June 1986. He said that a "Particulars of

Investigation Sheet" was completed. This was annexed to his	- ,
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affidavit. Mr. Howes said it was a record of his actions and by referring to the notations he could say that on that date he had	L.
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a conversation with the defendant's wife and carried out an	..
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examination of stock on display.	He said that he located 13	t ..
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counterfeit slicks and nlne corresponding video cassettes. These

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were labelled by him and nominated upon a 'schedule1 which was attached to a warning letter which he handed to the defendant's wife; a copy is in evidence.

Paragraph 27 of his affidavit was as follows:-

"27. On Tuesday, 1st July, 1986 my records

indicate that I returned to Harris Park Video and had a conversation with Dennis GIANNIOTIS. Together we examined the identified property and various identification methods were pointed out to him which was my common practice at the time.

I selected genulne Warner slicks and

cassettes from his store and indicated that the small printing on the reverse of the slicks was frequently 'blurredp or 'out of focus' compared with the genuine slicks. I also polnced out to hlm the 'halo' effecc

around the black colouring of the silver Warner's security stlcker which was not present on the genulne and also the fact that all genuine Warner products should have both that silver sticker and another one in the left hand wlndow whlch was whlte wlth respective Warner logos thereon. I further pointed out that all genulne Warner products had elther chinagraph writing or a small label under the cassette's face label - any of these specified should be cause for concern that the product is not genuine."

Mr. Howes said:-

"Mr. GIANNIOTIS appeared to observe each of

the above as I pointed them out to him."

when Mr. Howes was giving his evidence in chief he was asked whether the only instruction about possible counterfeit tapes had	, .
,.
been given in relation to Warner slicks and cassettes. He said	I
that that was not the case and that he had discussed with the	..
5
i
defendant other makes and other indications of features which would lead a person to suspect that a tape might be counterfeit.

Counsel for the defendant objected to the leading of this t

evidence. He referred to the directions which had been given for the preparation of the case and the fact that the evidence was to	L
i
*
be given on affidavit.	He said that it was unfair to his client
that it should be led in this way and without any prior notice.	!
I decided that I would determine the matter after the evidence had been led on the voir dire. This was done this	5
morning and Mr. Howes was cross-examined on the voir dire. The
i

a .

21.   I.

defendant hlmself gave evldence on the volr dire after whlch I

decided that I should admlt the evldence. I need now to make up I (

.,.

my mlnd whether or not I accept it. Counsel for the defendant	>	%-	.
.	.
has strongly urged that I should not do so, relying principally	, -.
I' .
on the fact that if it were accurate and reliable it would have
been included in the affidavit. Mr. Howes, in the course of h ~ s	I , , .
evidence, explained how the affidavit had come lnto existence.	r
, .
It had been prepared by him wlthout assistance, as is apparently	C .
his custom, and it had been prepared, so he sald, when he had antlcipated that the defendant would plead gullty. For this reason he did not think it necessary to set out comprehenslvely what had been said in relation to all makes of tape or rather to other makes of tape apart from the Warner's tape which is referred to specifically in the affidavit.
I have given the questlon whether I should accept thls evidence some anxious consideration. In reaching my conclusion I .	, .
-.
have, of course, had regard to the standard of proof which is	h .-
,I
< .
applicable.	,-. 8 .c
: ..

Having reflected on the matter, I have reached the conclusion that I should accept the evidence.	I .
. .
?r
: 2

Two matters have persuaded me

i
, .

that I should do so.	Firstly, there is a sentence in para. 27	I _ :
. , ,

which I have quoted which says:-	,
7 .

"Together we examined the identified property and various identification methods were pointed out to him which was my common practice at the time."

That is a perfectly general sentence and leads lnto what follows In relatlon to warner. I agree that one mlght not necessarily get everything out of the sentence, but to me, it has the hallmarks of somebody who is indlcatlng a lengthy conversation about methods of identlflcation, not necessarily restricted to the Warner tapes. A more Important factor is, I thlnk, thls. Mr. Howes is an Investigator of substantial experience who 1s concerned to educate people in the vldeo industry to detect possible pirate copies. There was slmply no reason for him to restrict what he said to the defendant to one make. It seems to me to be much more likely that he would have referred to a number of different makes rather than simply one.

Apart from those matters, I should say that, although at one stage I had some reservation about Mr. Howes' evidence, I have reached the flrm conclusion that I should, havlng seen him in the witness box, accept the evidence which he has given about this matter and I accordingly do so.

I have not referred in the account I have glven to every piece of evidence upon which the prosecution might rely to	establish knowledge or that the defendant ought reasnably to have
known that the copies were infringing copies. The evidence needs to be considered as a whole and it needs to be put together. I think the important factors which emerge from the evidence are the defendant's history in the video industry which extends back for some seven years; the knowledge of copyright and pirate copies which he has and which emerges from the later answers given in the record of interview; the fact that he knew that videos could be copied, as witness the copylng equipment which was found on his premises; the unlikelihood that he would not appreciate the danger of dealing with a vendor of second hand tapes such as Mr. Igimo, particularly in the light of his knowledge to which I have referred; and the statement that mr. 1-Iimo made to him and to whlch he referred in his interview, namely, "Don't ask me questions, you are happy," - this was a
. clear invitation not to pry.	It is true that one could not flnd

that all the vldeos in questlon here came from Mr. Mimo but it should not be overlooked that the defendant was in the habit of buying large quantities of second hand video films and had bought them from Mr. Mimo.

In all those circumstances, I have reached the clear conclusion that at the very least the prosecution here has established that the defendant ought reasonably to have known that each of the articles was an infringing copy. I think the more difficult question is whether it has established actual knowledge in all or some of the cases. Counsel relied very strongly on so much of the judgment of Devlin J. in the Taylors Central Garages case to which I earlier referred which deals with	knowledge of the second degree.	It will be recalled that his
Lordship said (p. 385):-

"They have to consider then whether what the defendant was doing was, as it has been called, shutting his eyes to an obvious means of knowledge. Various expressions have been used to describe that state of mind."

And he referred to what Lord Hewitt C.J. had said in Evans v.
Dell.

I must confess that the case for holding that there is here demonstrated actual knowledge is a strong one, but I must bear in mlnd, as I have indicated, thac the tapes which were purchased from Mr. Mimo, who said to the defendant to ask him no questions, were not necessarily all the tapes whlch are the sublect of the charge. The evldence does not enable one to tell. In the result I have reached the conclusion that I ought not to find actual knowledge but I do, as I say, find that the defendant ought reasonably to have known that each of the articles was an infringing copy of the fllms in question.

Accordingly, the defendant is convicted of the offence for which he has been charged.

I certify that this and the23 preceding pages are a true copy of the reasons for judgment herein of The Honourable Mr.

Justice Sheppard. ,

Associate

Dated 25- 5 ~ L . y /98Y

IN THE FEDERAL COURT OF AUSTRALIA	)	,:-.
!

No. NG64 of 1989

GENERAL DIVISION

1.;

BETWEEN:  .? ;:

JOHN PONTELLO ..

Prosecutor	.	.
.	.
1	.	1

AND :

DENNIS GIANNIOTIS

Defendant

CORAM: SHEPPARD J.

DATE : 26 JULY 1989

REASONS FOR JUDGMENT (ON PENALTY)

HIS HONOUR: Yesterday the defendant was convicted of an offence under subsec. 132(2A) of the Copyright Act 1968 ("the Act"). The conviction was based upon his being a person who ought reasonably to have known that 67 video films were infringing copies of

knew that they were such copies. subject matter under the Act, not upon the basis that he actually The defendant was born in Greece on 17 February 1943. He

presently lives at Greystanes near Sydney. His employment and educational history are set out in an antecedents report prepared by Detective Sergeant Carlin and I need not refer to the entirety of them. As I said in reasons for judgment delivered yesterday,

he has been engaged one way or another in the video buslness as a principal for the perlod of seven years up to the date of this offence, which was 31 May 1988, and slnce then. The defendant was apparently one of a number of persons convicted, the others on pleas of guilty, in relation to fllms which were infringing copies of sublect matter and which were marketed by two persons, Mr. Ceselli and Mr. Reich. They and others have been dealt with by other judges of the Court. Each has been frned.

The penalties for which the Act provides are specified in S. 133. Relevantly, the fine which is provided for in the present

case is a flne not exceeding $1,500 for each article to which the offence relates. An alternative is imprisonment for a period not exceeding two years. Both a fine and imprisonment may be imposed if the Court thinks it appropriate. I refer to subsec. (l)(b)(i). There being 67 fllms the subject of the conviction, the maximum pecuniary penalty in this case is 67 times $1,500. In the cases that came before the other judges there seems to have been imposed a fine in relation to films in each case of

$300 per film. If I were to impose a monetary penalty, that is

the order of the penalty I would have in mind, because I am a

position by courts. This cannot always be given effect to and	firm believer in the even treatment of defendants in a similar
departures from it are from time to time made because of different circumstances. But by and large I would see no reason to depart from that course here if I were minded to impose a pecuniary penalty.

According to the antecedents report the defendant has assets

which consist of a family home, said to be worth $180,000; a weekender at Jervls Bay worth $90,000; a car worth $8,000 and household furniture worth an estimated $15,000. Some information is given about the expenditure which is regularly incurred by the defendant. On the face of the document, whilst the defendant has assets of substantial worth, he is not in a particularly liquid position. I bear in mind however that the information was information given to him by Detective Sergeant Carlin and that the defendant himself has not given evidence either in his defence or on the question of penalty.

There is no doubt that plracy in the video industry is rife. That is something which is well known. There is no doubt either that it is often difficult to detect. The legislature, obviously, takes a very serious view of the offence as witness the amendments which were made to the Act in 1986 by whlch substantial increases in the penalties provided for were made.

As Wilcox J. remarked, in one of the other cases, the day

will come in this Court when people in the position of the

defendant here, perhaps even first offenders, as he is, will find

themselves imprisoned for offences of this kind. I do not myself

believe that that day is far off and I have, indeed, considered whether I should not impose a sentence of imprisonment in this case, so seriously do I regard the offences.

I have decided that I should not take that course, however. One reason which has persuaded me that I should not do so is the substantial co-operation afforded the police by the defendant. I

thlnk it is falr to say that l£ he had nor: submitted to the

interview with Detective Sergeant Carlin, a record of which 1s in

evidence, the evidence against him rnlght not have been nearly so strong. He was well aware that he was not obliged to attend the interview. He was cautioned and he was advlsed by hls solicitor of his rights. The lntervlew dld not take place on the day that the vldeos were seized, but a day or two later when the defendant, of his own volltlon, went to see Detective Sergeant Carlln at hls office. The record of Interview does not disclose, to any extent, any evasiveness on the part of the defendant. He appears to me, by and large, to have answered questions frankly and for that reason it is plain that he has co-operated substantially with the police. That is a matter which I think should be taken into account, very much in his favour.

As I have said, this is a flrst offence but it does lnvolve a very great number of films - 67 as I have mentioned - and so it is not just an isolated case where one finds that pirate videos, numbering perhaps two or three, or even half a dozen, have been in the possession of a vldeo shop of the kind which the defendant

defendant should understand that and should understand how operates. The offence is, therefore, a serious one; the seriously the Court views it and how seriously it is viewed by

the legislature, which, as I have said, does empower the Court in
an appropriate case to impose a term of imprisonment.

As I have indicated, if I were to impose a pecuniary penalty
in this matter, it would be of the order of $300 per film; that
would involve a penalty of some $20,000. In the course of the

discussion which has taken place this rnornlng I discussed wlth

counsel, both for the informant and the defendant, the question whether I should not, instead of imposing a pecuniary penalty, permit the defendant the opportunity of enterlng into a recognizance to be of good behaviour for three years on condition that he pay the informant's costs of the proceedings whlch are assessed at $6,500. That is a course which counsel for the defendant has asked me to take. Counsel for the informant has raised no opposltlon to it.

In the circumstances I think it is a course that I should follow, but the defendant should clearly understand, and I would hope his legal advisers would emphasize this to him, that when he is required, as he will be, to be of good behaviour for three years that means what it says and if he should transgress in any respect, and particularly in respect of an offence under the Act, he can be called here again to be sentenced for this offence as well as for any other offence for which he may be convicted. If that occurs it is possible, I do not say one way or another whether it will happen, that in respect of the offence for which he has been convicted he will after all then be sentenced to a

emphasized to him so that he understands the position. term of imprisonment and I would hope that that would be The orders I make then are as follows. Pursuant to S. 20 of

the Crimes Act 1914, I order that the defendant be released without sentence being passed upon him on his entering into a recognizance in the sum of $1,000 on condition that he will:-

(a)	Be of good behaviour for a perrod of chree years from today;
(b)	on or before 31 August 1989 pay to the informant the sum of $6,500 for hls costs of the prosecution.

I direct that the recognizance be taken before a Registrar.

Pursuant to subsec. 133(4) of the Act, I order that there be delivered up to the Australian Film and Video Securlty Office, for delivery to the varlous copyright owners, the vldeo films listed in the schedule initialled and dated by me and placed wlth the papers.

There is only one other thing I wish to say and it arises out of mr. Howest evidence yesterday. It seems to me that one of the great problems in this industry may be a lack, or a professed lack, of familiarity with copyright by those who conduct video shops. Mr. Howes gave evidence yesterday, which I accepted, of a conversation he had had wlth thls defendant on 1 July 1986.

whether I should accept Mr. Howesf evidence. It may not be There were no notes of the conversation and the question was possible, but I would have thought it might be desirable if the

Security Office prepared in as simple language as possible a short explanation of the nature of copyright in films, of the consequence of infringements of copyright, of being in possession of infringing copies and the other offences, and of the penalties for them and also the civil remedies, and, in the course of explaining to the proprietors or employees of video shops, that

such document be given to the proprietor with a request that, if he did not understand it, he should either consult his own solicitor or consult an appropriate member of the Securlty Office.

I make this only as a suggestion but, if piracy is as rife as it appears to be, it may be that the industry would be helped by seeing to it that knowledge of what is required and what is involved 1s imparted to the relevant section of the Industry in that way. Another advantage would be that in the event of a prosecution such as this it might be much easier to prove that the particular shop owner or employee did have the requisite knowledge.

Unless either of you wish to say any more, that is all I wish to say. All the exhibits may be returned and, if there is no other matter, I shall adjourn.

I certify that this and the preceding pages are a true copy of the reasons for judgment herein of The Honourable Mr.

Justice Sheppard.

Associate

Dated 26 L /P@?

Counsel for the Prosecutor:	1-Ir. J.J. 1411lar
Solicitors for the Prosecutor:	Director of Public Prosecutlons
Counsel for the Defendant:	i.lr. G.J. Stanton
Solicitors for the Defendant:	Peter Bouzanls & Assoclaces
Dates of Hearing:	24, 2 5 and 26 July 1989
Place of Hearlng:	Sydney

I..

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