Stevens v Kabushiki Kaisha Sony Computer Enetertainment & Ors

[2004] HCATrans 273

[2004] HCATrans 273

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S468 of 2003

B e t w e e n -

EDDY STEVENS

Applicant

and

KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT

First Respondent

SONY COMPUTER ENTERTAINMENT EUROPE LIMITED

Second Respondent

SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED

Third Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 6 AUGUST 2004, AT 9.37 AM

Copyright in the High Court of Australia

__________________

MR E. STEVENS appeared in person.

MR D.K. CATTERNS, QC:   May it please the Court, I appear with my learned friend, MR R. COBDEN, for the respondents.  (instructed by Blake Dawson Waldron)

GUMMOW J:   Now, Mr Stevens, we have received and studied your documented submissions, that is the document of eight pages, I think.

MR STEVENS:   The one I just – today, yes, your Honour.

GUMMOW J:   Yes, now does Mr Catterns have a copy of that?

MR STEVENS:   No, that is basically my oral submission that I intend to read to the Court basically just to say to the Court that I have documented it so I do not have to rely on memory, et cetera, and miss something out.

GUMMOW J:   Yes, well have you an extra copy for Mr Catterns?

MR STEVENS:   I gave four copies to the Registrar, but I only have one copy here.

KIRBY J:   You have not seen it, Mr Catterns?

MR STEVENS:   They will hear it when I read it out.

GUMMOW J:   I am going to call on him first, you see, because we have read it and it helps us to progress our busy day.  I think we will call matter No 3 and come back to 2 when Mr Catterns has had a chance to read your written materials, Mr Stevens.

AT 9.39 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.07 AM:

GUMMOW J:   Now, we will hear Mr Catterns first, Mr Stevens, and then we will see what you say in response to what he says.  Yes, Mr Catterns, you have had a chance to look at the outline.

MR CATTERNS:   Yes, your Honour, thank you.  Your Honour, just dealing first, if I may, with the matters Mr Stevens has raised before coming to the question of the construction of the section ‑ ‑ ‑

GUMMOW J:   What about his point at page 5?  He is saying there while this device has other characteristics, not all of which are malign and some of which are essential ‑ ‑ ‑

MR CATTERNS:   Does your Honour mean the circumvention device?

GUMMOW J:   Yes.

MR CATTERNS:   No, your Honour, that is not the finding in this case.  This case is a case where infringing copies were knowingly supplied and the device was supplied knowing that it would allow the infringing copies to play which otherwise they would not be able to do.

GUMMOW J:   The infringing device did not just have that characteristic.

MR CATTERNS:   In context, your Honour, that is the only characteristic about which there is a finding.  Mr Stevens appears to seek to raise a new argument that has not been the subject of any argument or finding at either stage, about how the boot ROM and the access code worked together.

GUMMOW J:   Yes, that is right.

MR CATTERNS:   Your Honour, as we understand it that has not been a matter of dispute factually or legally at any earlier stage in the proceedings.  I was only in the appeal not the trial and I can certainly say that about the appeal and that is Mr Cobden’s recollection of the trial too, your Honour.  It certainly does not appear in the court’s reasons.

Your Honour, his Honour Justice Sackville makes the findings about that.  In paragraph 54 at page 19, his Honour describes how the mod chips work by overriding the PlayStation’s internal operating system, that is the boot ROM, so as to allow the console to load “unauthorised software” and then his Honour explains how it is done.  Then, your Honours, his finding about that is in paragraphs 61 to 63 at page 21 about Mr Stevens selling and installing the chips and there is a debate about whether a flatmate existed.  Then in 62, your Honours:

He also supplied unauthorised copies of PlayStation games –

and in 63:

At the time Mr Stevens supplied and installed the chips he was well aware that the purpose of installing the chip into the PlayStation console was to enable the console to play copies of the PlayStation games that did not carry the access code.  He was aware that many, if not all, such copies would be copies made without the authority or licence of any of the applicants –

and also the trademark.  So, your Honours, we respectfully submit that there would be no factual foundation for an argument that the chips operate in a different way, first propounded today.

It would also follow, your Honours, that the other two most important points as we see it that Mr Stevens makes would not arise.  This is not a test case about the making of backup copies under section 47C, although the ACCC tried to raise that issue as an in terrorem argument.  The argument was, if you construe technological protection measure the way Sony would have it that will cause difficulty for genuine backup copies, not this case, under section 47C.

The other issue that Mr Stevens seeks to raise relates to the parallel importation of genuine, non-infringing goods.  Well again, your Honours, his Honour made a clear finding that that was not the purpose of the technological protection device.  Secondly, that is not this case.  This is not a case about parallel importation of genuine goods but the sale of infringing copies and a device to circumvent the mechanism that stops them being played.

HEYDON J:   What is materially at stake in this case?  I mean, you got an injunction and you got an order that the matter be remitted to the primary judge for the determination of damages.  Are there damages of any size in issue?

MR CATTERNS:   I think the short answer is no, your Honour, but there may be some additional damages under section 115(4) of the Copyright Act.

HEYDON J:   Are we talking thousands or tens of thousands?

MR CATTERNS:   Of that order, your Honour.

HEYDON J:   Which order?

MR CATTERNS:   Sorry, tens of thousands.  I do not think it is of huge magnitude, your Honour, but we have not had ‑ ‑ ‑

GUMMOW J:   It might not be huge to Sony, it might be huge to Mr Stevens.

MR CATTERNS:   Yes, your Honour.

KIRBY J:   My tentative feeling is that the Full Court in the opinion of Justices Lindgren and Finkelstein is probably correct, but this is quite an important question, is it not?  It involves potentially an important provision in our law and a lot of money, a lot of people, a new technology, significance generally.  Is that not a reason for us to have a look at it?  It is not uninteresting?  A lot of work we have to do is not all that interesting.  Always a pleasure here to hear from you.  I do not know about Mr Stevens, but ‑ ‑ ‑

MR CATTERNS:   We are grateful for that, your Honour.  I cannot disagree with much of what your Honour has just put, largely where ‑ ‑ ‑

KIRBY J:   There is a difference between Justice Sackville and the Full Court and a difference within the Full Court.  The difference within the Full Court is not so important.  Justice French just said, “Well, I think that it is clear enough” and Justice Lindgren said what I am inclined to think, well there is a bit of unclarity, but if you have regard to the purpose of the statute, which is the way this Court now interprets statutes you will come to the conclusion this is exactly what it was designed to catch.

MR CATTERNS:   Precisely, your Honour.

KIRBY J:   That is your best argument, in my opinion.

MR CATTERNS:   Your Honour, we would respectfully submit that also just the plain words of the section show – may I quickly go to section 10(1), your Honours know we go there via section 116A, the definition of circumvention device in section 10 and then ‑ ‑ ‑

GUMMOW J:   I notice, if one looks at the Copyright Amendment (Digital Agenda) Act 2000, I guess one has to construe these new sections with the objects of that amending Act in mind.

MR CATTERNS:   Yes, your Honour.

GUMMOW J:   This introduces into copyright law the notion of financial awards for investors as well as creators.

MR CATTERNS:   Yes, your Honour.

GUMMOW J:   I suppose that helps you.

MR CATTERNS:   I suppose it does, your Honour, and it would also in the modern world not be limited to investors in subject matter other than works such as films and sound recordings, but would also include computer programs.

KIRBY J:   Intellectual property and protecting overseas owners of intellectual property has become suddenly very important.

MR CATTERNS:   Yes, your Honour, that is right.

GUMMOW J:   If we did grant leave, I am not saying we will at the moment, it would be appropriate to look at the Clarendon Lectures by Professor Cornish delivered in 2002.  He has something to say about this sort of legislation.

MR CATTERNS:   Your Honours, the ‑ ‑ ‑

GUMMOW J:   It is not really copyright legislation as traditionally understood at all.  It is something new that is going on.

MR CATTERNS:   Yes, indeed, your Honour.  There is no doubt about that, with respect.

GUMMOW J:   I mean courts start to palpitate because they think about authors and people in garrets and so on.  That is not what this is about.

MR CATTERNS:   No, your Honour, that is right.  There has been some debate in the last decade whether there ought to be what the Americans call sui generis legislation of this type rather than putting it in the Act.

GUMMOW J:   Anyhow, you were taking us to section 10?

MR CATTERNS:   Yes, your Honour, the definition of “technological protection measure” and, picking up what his Honour Justice Kirby said about what comes out of the legislative history, this section in itself, or this definition in itself, shows the two possible strategies.  One is a copy protection – copy control mechanism which is the (b) and the other is a different concept, access control.  The idea of access control is that somebody is prevented or inhibited, which is the words of this section, or deterred from infringing copyright by the fact that the copy they make will be useless because you will not be able to get access and that is the instant case.

The legislative history that his Honour Justice Lindgren described had the House of Representatives Committee, to come to the point, recommending that the mechanism of protection legislation just contain a copy control protection.  That was not accepted.  As your Honours can see on the face of the definition there are two types – two means, either or both of those means of preventing or inhibiting infringement: 

(a)      by ensuring that access –

can only be gained with the copyright owner’s consent and –

(b)      through a copy control mechanism.

That is why, we respectfully submit, on the face of the section, the Full Court and his Honour Justice French, in particular, are right and the words “prevent” or “inhibit” here are apt to cover a mechanism ‑ ‑ ‑

GUMMOW J:   It is this word “inhibit”, is it not?

MR CATTERNS:   Yes, your Honour, although his Honour does get it out of “prevent” too, I think.  But we would respectfully submit, at least out of “inhibit”.  So you inhibit infringement that might take place somewhere else by the fact that even when a slavish copy is made of this CD-ROM that does not include the access code and so the person who gets this copy, although it has all the data that constitutes the game it does not have the access code so it cannot be played, therefore in terms of (a), the access to the work is unavailable because you do not have the access code.

Your Honours, perhaps our best answer to what his Honour Justice Kirby put to me is that the matter is not attended by sufficient doubt.  Although his Honour Justice Sackville did disagree, his Honour read into this section a need for some sort of physical prevention.

GUMMOW J:   Where do you find that defect as you see it in Justice Sackville’s reasons?

MR CATTERNS:   Your Honour, it begins at paragraph 114.

GUMMOW J:   Yes, that is right.

MR CATTERNS:   Page 38, where his Honour notes both (a) and (b) but then only goes to the latter expression the “copy control mechanism” and says:

While the latter expression is not defined in the Copyright Act, the legislative history to which I have referred suggests that it is intended to encompass a mechanism that restricts the extent of copying –

We would agree with that about (b), your Honours, but submit it does not apply to (a).  Then his Honour then elides into 115, or leaves out (a) and asks in line 2 that there –

be no technological or perhaps mechanical barrier –

His Honour has put behind him the idea of (a), restricting access, and really that is the short point, your Honours.  That continues at the top of page 39, line 5:

“physically” prevents or inhibits –

as distinct from your Honours at the end of the paragraph:

a general deterrent or discouraging effect ‑ ‑ ‑

GUMMOW J:   Now, that deterrent or discouraging effect, how do you say that will be encompassed by (a)?

MR CATTERNS:   Because, your Honour, the device which is probably best viewed as the access code and the boot ROM together prevent access to the work.  You have your copy CD-ROM, but it is useless because you do not get access to the work – always remembering the distinction between the work and the physical thing in which it is embodied.

GUMMOW J:   What are the words in (a) that would fit?

MR CATTERNS:   Your Honour, our device, our combined access code and boot ROM ensure that access to the work is available solely by use of an access code with the authority of the owner of the copyright.  It really is as simple as that, your Honours.  Because these infringing copies lack the access code, you cannot get at the work to play the game and, therefore, the device is a technological measure within the definition and everything else follows.

KIRBY J:   I take the force of your criticism of Justice Sackville’s reasons, but it still leaves the matter on the basis that there was a difference in the Full Court, it does affect a lot of people and the history of this area of the law and this form of technology has been one of struggle between those who have wanted to protect their intellectual property and those who have wanted to spread knowledge and ideas.  I remember from the old days of the wire recorder at the very earliest days people were copying them and then came the sound recordings and then the video recording.  There have always been people wanting to get at the ideas that are in them.  One’s inclination is not to strike that down unless the law is clear, but on the other hand to give effect to the purpose of Parliament.  Now, there is a tension there.  Is it not one that this Court should look at?

MR CATTERNS:   Well, yes, your Honour.

KIRBY J:   You say if there is a tension.

MR CATTERNS:   Yes, with respect, your Honour.  We respectfully submit that the legislature has already answered the question and answered it clearly.  Your Honours, I should say but not in terrorem that – this is to protect our position – if there were a grant of special leave we would also file a notice of contention to deal with the question of reproduction in RAM, in particular.  That was dealt with by the Full Court, Justice Finkelstein our way and the majority against us, and the question, I think, to the same effect.

KIRBY J:   Is that an important question?

MR CATTERNS:   Yes, your Honour, I have to say so.

KIRBY J:   You are making it sound more and more attractive.

MR CATTERNS:   And, your Honour, we would also have to submit that the decision of the Full Court is attended by doubt with respect to that.  That has been a vexed question, your Honour, the question of reproduction in RAM.

KIRBY J:   Have other countries enacted laws similar to the Digital Agenda Act?  Has Canada enacted such a law, New Zealand, UK?

MR CATTERNS:   Generally speaking, yes, your Honour.

GUMMOW J:   Well, there is UK legislation, is there not?

MR CATTERNS:   Yes, your Honour.  It appears only to deal with a copy control mechanism on its face, but because in the UK there is no doubt that a reproduction in RAM is a reproduction then because this device does stop reproduction in RAM it certainly comes within the UK definitions.

KIRBY J:   I see Mr White appeared for the ACCC in the trial.

MR CATTERNS:   Yes, your Honour.

KIRBY J:   What role did the ACCC play in the proceedings?

MR CATTERNS:   Your Honour, the ACCC was attempting to submit that although this case did not directly concern the making of a backup copy under section 47C, nevertheless on our construction such copying would not be permitted.  What we submit about that, your Honour, is that that is intended because under section 116A which provides for the relevant tort there is an express exception identifying a number of the provisions ‑ ‑ ‑

KIRBY J:   This is on the notice of contention point, is it?

MR CATTERNS:   No, your Honour, this is just a point that it ended up not playing a part in either his Honour Justice Sackville’s or the Full Court’s reasoning; it is irrelevant is our short point, although ‑ ‑ ‑

KIRBY J:   They did not appear to support the applicant, or did they?

MR CATTERNS:   Their argument supported Mr Stevens.  Yes, they did, your Honour.

GUMMOW J:   Now, Mr Catterns, the draft notice of appeal which appears in the application book at pages 166, do you have any criticism of that?

MR CATTERNS:   Your Honour, I think it sufficiently picks up the issue.  For example, 5 would do, your Honour.

GUMMOW J:   What about the new issues today?  You would object to them going in, would you not, what you say are the new issues?

MR CATTERNS:   Your Honour, the new factual issue, yes.  The other arguments that Mr Stevens raised under section 47C and in relation to parallel importation are well enough dealt with by his Honour Justice Sackville.

GUMMOW J:   By what is here?

MR CATTERNS:   Yes, your Honour.

GUMMOW J:   Now, how lengthy was the appeal record in the Full Court?  How many volumes are we talking about?

MR CATTERNS:   I think one volume, your Honour, at worst two.  We agree that the case would take a day even with the RAM argument.

GUMMOW J:   But would there be any difficulty in using the Full Court appeal books again, the supplementary book?

MR CATTERNS:   No, your Honour, I do not think so.

KIRBY J:   Yes, how are we going to get help from the other end of the Bar table?  That is the question.

MR CATTERNS:   Your Honour, we will, of course, draw the Court’s attention to everything we have considered relevant.

KIRBY J:   We rely on you.

GUMMOW J:   I think what might be appropriate, Mr Catterns, is that if we did grant special leave, not only Mr Stevens but yourself should advise the ACCC of what has happened and then we would have a directions hearing before a single Justice to see what can be done about legal representation for Mr Stevens or in Mr Stevens’ interests.  We will mention that to Mr Stevens now.

MR CATTERNS:   We will certainly do that, your Honour.  We will tell the ACCC in any event, your Honour.  May it please the Court.

GUMMOW J:   Yes, Mr Stevens.

MR STEVENS:   Yes, your Honour.  Just in relation to what you were just saying there is a possibility ‑ ‑ ‑

GUMMOW J:   Perhaps you had better come to the microphone.  We note in your written materials that there is a possibility you flag, that the ACCC would be very interested. 

MR STEVENS:   Yes, and also possibly the people that represented me at the last appeal court pro bono, it is possible they might come aboard again if we get an appeal granted.

GUMMOW J:   Yes.

HEYDON J:   That was a barrister was it not?

MR STEVENS:   They did have a barrister, yes.

GUMMOW J:   Yes, it was experienced counsel, I think.

MR STEVENS:   Yes.

KIRBY J:   You really would need that.  This is quite technical and ‑ ‑ ‑

MR STEVENS:   Well, this is it, yes.

KIRBY J:   It really is not fair to you or to the Court.

MR STEVENS:   It is the misinterpretation of the technical stuff that has caused the problem.

KIRBY J:   And if you get special leave it is because it is a matter of importance and, therefore, we need assistance on that.

MR STEVENS:   Right.

KIRBY J:   It may be that the Bar Association or some organisation interested in intellectual property law would be willing to give assistance.

MR STEVENS:   I did make inquiries to try and get represented for today, but apparently most of the ones I came across they do not do pro bono for copyright, only for criminal stuff and that, you know.

KIRBY J:   Yes.

HEYDON J:   What is wrong with asking Mr Nicholas?

MR STEVENS:   Mr Nicholas, what, from Gadens, the people who represented us?

HEYDON J:   No, he is a barrister.

MR STEVENS:   He was employed by them, I think.

KIRBY J:   There is an intellectual property lawyers’ association, is there not, Mr Catterns?  Is there some such body?

MR STEVENS:   If there is, your Honour, I would like to have their phone number and I can get onto them.

MR CATTERNS:   Your Honour, we would ‑ ‑ ‑

KIRBY J:   Somebody, I mean this is a very interesting area of the law and if there is somebody out there who ‑ ‑ ‑

MR STEVENS:   It is in the fact that it is new technology and it has to be sorted out.

KIRBY J:   We know all that.

GUMMOW J:   Gentlemen, our views, we should indicate, are this.  We are minded to grant special leave on terms of the draft notice of appeal appearing at page 166, Mr Stevens, in the application book.  We direct that the appeal books used in the Full Court of the Federal Court be utilised in the appeal to this Court, with a supplementary book to include the reasons of the Full Court and the pleadings in this Court.  That should produce some savings of costs. 

On this question of representation, Mr Stevens, I will put the matter in for directions before me on Friday, 20 August at 9.30.  You should indicate that to the ACCC and to any other parties you think may be available to give you assistance.  If they could send representation along at 9.30 on 20 August, we will see what can be done about representation and get it sorted out. 

MR STEVENS:   So that appearance with you is just to get representation? 

GUMMOW J:   To get that sorted out, yes. 

MR STEVENS:   Okay. 

KIRBY J:   You realise that on the grant of special leave and the hearing of the appeal, if you lose, there will almost certainly be a costs order against you, and the costs could be substantial.  You understand that you have entered that league? 

MR STEVENS:   Well, I have already expected that anyway, basically, in my reasoning. 

KIRBY J:   Yes, as long as you understand it. 

GUMMOW J:   There will be a grant of leave in application No 2, as so indicated.  The matter will be re‑listed before me, as so indicated, to sort out this question of representation.  It would be useful if you supplied a copy of today’s transcript to any of these interested parties.  They will appreciate what is going on, then. 

MR STEVENS:   Will the Court send me notification of what we have just ‑ ‑ ‑

GUMMOW J:   They will, yes. 

MR STEVENS:   Right.  Have you taken a note of today’s oral statement, basically? 

GUMMOW J:   Yes, but we are limiting the grant to the draft notice of appeal. 

MR STEVENS:   Okay. 

KIRBY J:   We cannot get into factual matters which were not contested before. 

GUMMOW J:   We want to be quite clear about that. 

MR STEVENS:   Okay, thank you. 

GUMMOW J:   We will adjourn to reconstitute. 

AT 10.32 AM THE MATTER WAS CONCLUDED