Stevens v Sony Computer Entertainment & Ors

[2005] HCATrans 30

[2005] HCATrans 030

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S319 of 2004

B e t w e e n -

EDDY STEVENS

Appellant

and

KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT

First Respondent

SONY COMPUTER ENTERTAINMENT EUROPE LIMITED

Second Respondent

SONY COMPUTER ENTERTAINMENT AUSTRALIA PTY LIMITED

Third Respondent

GLEESON CJ
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 8 FEBRUARY 2005, AT 10.18 AM

Copyright in the High Court of Australia

__________________

MR J.V. NICHOLAS, SC:   May it please the Court, I appear with my learned friend, MR C. DIMITRIADIS, for the appellant.  (instructed by Gadens Lawyers)

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)

MR J. BASTEN, QC:   If the Court pleases, I appear with MR G.C. McGOWAN, SC and MS L.G. de FERRARI for the Australian Digital Alliance Limited and the Australian Libraries Copyright Committee, seeking leave to be heard as amici.  (instructed by Sarah Waladan)

GLEESON CJ:   We have the written submissions from the parties on that application.  Does anybody want to add anything orally to what they have put in writing?

MR NICHOLAS:   No, your Honour.

MR CATTERNS:   No, your Honour.

GLEESON CJ:   Yes, you have that leave, Mr Basten.  I assume the parties have agreed between themselves on a division of time and that you will go second?

MR BASTEN:   Yes, that was the proposal, your Honour, that we go after the appellants and before Mr Catterns.

GLEESON CJ:   Yes, thank you.  Yes, Mr Nicholas.

MR NICHOLAS:   Your Honours, this case raised three important questions arising under the Copyright Act.  The first question concerned the proper construction of the section concerned with technology protection measures and circumvention devices.

KIRBY J:   Will you in your submissions provide in very simple language some notion or a description of how the technology actually operates?  I have read and reread the descriptions but I am not absolutely sure that I understand it.

MR NICHOLAS:   Yes, your Honour, I proposed to come to the technology and perhaps work through it orally, notwithstanding that it is covered in some detail in the written document.  To the extent it appears in the appellant’s submissions it is based upon the findings of the primary judge and, save for the three issues that we have identified and I am in the process of enunciating now, there is no relevant contest between Mr Catterns and myself as to the correctness of the findings that were made by the primary judge and his findings of fact are not challenged.

You see, your Honours, the first question concerned the meaning of section 116A, which draws on a definition of the expression “technological protection measure”, which is defined in section 10(1) of the Act.  The question as fought out in the case heard by Justice Sackville, who was the primary judge, first instance, was really this, that the respondent’s protective device, and that is a device which we will refer to as the Boot‑ROM and/or the access code, that is found on PlayStation CD‑ROMS and PlayStation consoles, constitute a “technological protection measure” within the meaning of that definition.  That is the first issue, your Honours.

The second issue was, what is the proper construction of the definition of “material form” in section 10 of the Act, and, in particular, did the playing of a PlayStation game on the respondent’s PlayStation console involve the reproduction in “material form” of the whole or a substantial part of a computer program within the meaning of the Act?

KIRBY J:   That is the matter that has been the subject of amendment.

MR NICHOLAS:   Yes, your Honour.  With effect from 1 January of this year.  Now, it has always been  ‑ ‑ ‑

GUMMOW J:   The definition of “material form” was not changed by the Act 110 of 2000.

MR NICHOLAS:   That is correct, your Honour.  The definition was changed as a consequence of the coming into effect of the Australia United States free trade agreement.  That amendment, and other amendments to another definition in the Act, that concerns the third issue, which I will now come to – is also affected by that series of amendments.

KIRBY J:   At some stage, perhaps you can help us on the principles that apply where Parliament, between a decision and the final determination, amends the Act.  Does it mean that it is accepting the decisions below or does it mean that it is making beyond doubt clear that which might not have been clear?

MR NICHOLAS:   Your Honour, so far as the amendment to “material form” is concerned, we explored that question at some length before preparing the written document, and we would accept that the amendment would have to be of a character where one could not say, one way or the other, whether what was occurring was clarification of the law or a change in the law.  We do not see that approach to the amendment as really advancing the argument in one direction or another. 

Your Honours, the third issue that arose in the case concerned ‑ ‑ ‑

KIRBY J:   I suppose we would not be blind to the fact that the United States of America takes very seriously the protection of its intellectual property, repeatedly refers to it, constantly talks about it and that was part of the free trade agreement.

MR NICHOLAS:   Your Honour, the circumstances in which the amendment came about probably makes it, in this case, even more difficult than might otherwise have been to draw inferences as to whether or not Parliament should be taken as having intended to correct a mistaken view of the provision as it originally stood.

Your Honours, the third issue in the case was whether or not, in the course of playing a PlayStation game on a PlayStation console, the user thereby makes a copy of the whole or a substantial part of a cinematograph film within the meaning of the Act.  More particularly, does the evidence establish that a substantial part of such a cinematograph film is embodied in the RAM of the PlayStation console during this process?  Now, I will come to the technology shortly.

GLEESON CJ:   Just a minute.  You succeeded on issues two and three in both the courts below, did you not?

MR NICHOLAS:   Yes, your Honour, we did, by majority in the Full Court with Justice Finkelstein dissenting on both issues.  We accepted before Justice Sackville at first instance and in the Full Court that if either of the second issues were decided adversely to us, we would also fail in relation to section 116A, that is to say, the first issue, not because of its interpretation, but because of its application to facts of this particular case.

GLEESON CJ:   I presume you will be devoting the bulk of your argument to the first issue.

MR NICHOLAS:   Yes your Honour, I will.  We have addressed in the document the two other issues, but we will focus on the first issue in‑chief ‑ ‑ ‑

GLEESON CJ:   And the first issue turns on the meaning of the word “inhibit”.

MR NICHOLAS:   Yes your Honour, that is so.

GLEESON CJ:   Entirely.

MR NICHOLAS:   Yes, your Honour, that is so.  May I take your Honours before I go to the statement of facts and technology to the relevant provisions of the Act.

GUMMOW J:   Do we not have to start – what are we construing?  Are we not construing the Act 110 of 2000?

MR NICHOLAS:   Your Honour, we are ‑ ‑ ‑

GUMMOW J:   Which has its own objects clause, that is why.  Section 3 of that Act gives some clue as to what they were trying to do.  Is that not right?

MR NICHOLAS:   Yes your Honour, it does in that the Act was introduced for the purpose of it addressing issues arising out of the use of digital technology.  I will turn up section 3 your Honour, I do not have it at hand, of that Act, but may I take your Honours firstly to section 116A of the Copyright Act as in force at relevant times.

Your Honours, the Act provides that:

If:
(a)      a work or other subject-matter is protected by a technological protection measure; and
(b)      a person . . . 

(i)       makes a circumvention device ‑ ‑ ‑

GUMMOW J:   What does this word “protected” mean?

MR NICHOLAS:   Your Honour, we submit it is directed to protections.

GUMMOW J:   I mean, the books in a library are protected, I suppose, by a key of the door.

MR NICHOLAS:   That is so, and there is no reason when one reads the section to say that it is necessarily limited to the very narrow types of facts with which we are concerned in this case.

GUMMOW J:   Any “work”.

MR NICHOLAS:   Yes, “or other subject-matter”, your Honour.

GUMMOW J:   Yes.

MR NICHOLAS:   The nature of the protection, your Honours, is further defined by ‑ ‑ ‑

GUMMOW J:   If I can just say to you, Mr Nicholas - and it is said to all of you - a lot of the discussion in the courts below – I suppose it is understandable – is focused upon this particular factual situation.

MR NICHOLAS:   Yes, your Honour.

GUMMOW J:   These provisions, it seems to me, have much wider reach.

MR NICHOLAS:   We accept that, your Honour.  One of the difficulties in a case of this kind is that the evidence before the trial judge ‑ ‑ ‑

GUMMOW J:   People easily become obsessed with computers.

MR NICHOLAS:   Yes, your Honour.  The evidence before the trial judge was quite limited; Mr Stevens was not represented.  It is difficult to investigate many of the arguments that arise in relation to which of the two competing constructions of this section should be preferred against a background of limited evidence and a situation where one must engage in some speculation to some extent as to other situations in which the provision may apply, either existing or which may arise in the future.

Your Honour Justice Gummow, can I come back to the question of what “protection” means, because there is some content given by the expression “technological protection measure” itself when one comes to that definition.

GUMMOW J:   Yes, there is.

MR NICHOLAS:   But coming back to 116A, the circumvention device, the prohibition extends to making a circumvention device, or if I may paraphrase, dealing in circumvention devices, is what is prohibited in subsection (1), and if one goes to subsection (1)(c), one of the elements that the cause of action is, and is only this, that:

The person knew or ought reasonably to have known, that the device or service would be used to circumvent, or facilitate the circumvention of, the technological protection measure.

Unlike provisions in other jurisdictions, this provision does not stipulate as an ingredient of the cause of action that the person knew, or ought reasonably to have known, that the technological protection measure would be used to infringe copyright, and that, we submit, is a very important consideration especially when one is considering the operation of these provisions in the light of provisions relied upon by my learned friends in their submissions in the UK and in the United States.

KIRBY J:   But that distinction is against you, is it not?

MR NICHOLAS:   No, it is not, with respect, your Honour, because we submit ‑ ‑ ‑

KIRBY J:   It seems to be.

MR NICHOLAS:    We submit that rather than that work being done here in 116A(1)(c), the legislature has instead addressed that issue in the definition of “technological protection measure”.  That is to say that the focus of this section is on the use of a device and a device that is used regardless of the knowledge of the person concerned as to whether it was to be used for the purpose of infringing copyright, but the important limit is when one goes to the definition of “technological protection measure . . . prevent or inhibit the infringement of copyright” appears, and jumping ahead, we submit that a device that does not prevent or inhibit, in the sense of block, prevent or establish some hindrance on the engaging in of an act of infringement, is not within the definition of “technological protection measure” and therefore is not caught by section 116A. 

Now, in relation to that matter, it is true that the case is focused quite considerably on the Sony PlayStation products, but in this important respect it demonstrates the point we wish to make quite eloquently.  The Sony PlayStation games can be copied.

GUMMOW J:   How are they protected?  Are they works or subject matter?

MR NICHOLAS:   They are works, your Honour, in the case of the computer programs embodied in the CD‑ROMs and they are ‑ ‑ ‑

GUMMOW J:   Literary works?

MR NICHOLAS:   Yes, your Honour, which of course comes back to the observation your Honour made earlier.  They also will involve subject matter other than works in the nature of cinema graph films.  Of course, they could involve other species of copyright as well when one is considering the question at a very general level.  The CD‑ROM itself, and I will come to the access code when talking about the technology, but the access code, I should point out at the moment, it does not form part of the copyright work.

GUMMOW J:   Is there a definition of access code?

MR NICHOLAS:   No, your Honour, there is not.  We say that the definition of “technological protection measure” when using the expression “prevent or hinder” is really addressing this question of does a device block, check or hinder an act of copyright infringement.  In the case of the Sony PlayStation disks, the copyright works and the other subject matter can be copied without restriction.  They have no effect at all on a person’s ability to make as many copies as they choose using conventional copying technology of the copyright works.

GUMMOW J:   What do you say would be an example of an inhibition that was not a prevention that was caught?

MR NICHOLAS:   Your Honour, an example may be – and this is an example given by Justice Sackville at first instance – of a device that, in effect, prevented the whole of the work from being copied.

GLEESON CJ:   A part of it I thought he said.  I thought Justice Sackville said an example of inhibition is preventing part of it being copied.

MR NICHOLAS:   Yes, your Honour, or preventing a whole or a part of it being copied, but either way there is not a complete prevention ‑ ‑ ‑

GUMMOW J:   But you can infringe by just taking a substantial part, can you not?

MR NICHOLAS:   Yes, you can, your Honour, but there would be an infringement, nonetheless.  The argument that I am advancing now finds some support in the permitted purposes provisions of the Act.  If your Honours can return to section 116A there are exemptions which are created in relation to certain uses and they are dealt with in subsection (2) of that section and subsection (3), in particular.  They refer back in subsection (3)(b)(v) to specific provisions of the Act which are there to render lawful what would otherwise be unlawful.

If one goes to section 116A(7) one sees this provision:

For the purposes of this section, a circumvention device or a circumvention service is taken to be used for a permitted purpose only if:
(a)      the device or service is used for the purpose of doing an act comprised in the copyright in a work or other subject-matter;  and
(b)      the doing of the act is not an infringement of the copyright in the work or other subject-matter under –

one of the relevant sections.

Your Honours, we say that that provides a strong indication that the legislature is creating a set of exceptions in relation to the making or dealing in circumvention devices which contemplates that the acts engaged in with the benefit of those devices would be infringements because it is curiously under subsection (7) not use of a circumvention device for a permitted purpose if one is using it for a purpose that is not there, in effect, or does not involve avoiding infringement.  So that the subsection, we say, is a strong pointer to what, in our submission, is the correct position.  That is to say that when the definition of “technological protection measure” refers to preventing or inhibiting infringement of copyright, it is doing so in the sense that the device is, in the course of its technical operation, erecting a barrier or an obstacle or some hindrance to the act of infringement.  A clear example of such a device would be a device which required the use of password‑protected access to a copyright work and that might occur, for example, in relation to a website on which copyright work is stored, it might occur in relation to literary works that are stored on CD-ROMS or other electronic media.

McHUGH J:   Is that your argument or does your argument not really come to that, that the TPM is really directed to protecting devices that are really part of the work in its electronic form?

MR NICHOLAS:   If they are part of the work in its electronic form, certainly.

McHUGH J:   In other words, if it is designed to deal with CD‑ROM burners that in some way might negate or destroy the effect of an access code within another CD‑ROM.  Your argument seems ‑ ‑ ‑

MR NICHOLAS:   Yes, your Honour, and that the operation of the section can be measured in this way.  If one does copy the Sony PlayStation disk and thereby reproduce onto another disk or on to a hard drive of one’s computer, a relevant work or other subject matter, this technological protection measure does nothing to interfere with one’s ability to do that.

HAYNE J:   How much does that argument seek to segregate the words “prevent or inhibit” and divorce them from the specification of means?  By that question, I mean to draw attention to the underlying question of whether the specified means, without more, are legislatively taken to be methods of prevention of inhibition.

MR NICHOLAS:   Yes your Honour, and in passing may I say that, of course, (a) and (b) seem to define exhaustively in terms of the categories the two means by which the result may be achieved.  But, your Honour, those specifications of means do not cut across the argument, because if one looks at subparagraph (a) of the definition, it is clear enough that one can protect works in the way we submit this definition is concerned with, by denying access.  The first example I give beyond the facts of this case is a password protected website that denies access to material which, if that device was defeated, could be made accessible for the purposes of copying.

Your Honours, the other examples given, decryption, unscrambling or transformation, are also, we submit, matters which would need to be circumvented, or techniques or devices which would need to be circumvented, for one to obtain access to the work.  Now ‑ ‑ ‑

McHUGH J:   Does your argument get some support from paragraph (b) of the definition, namely, “through a copy control mechanism”?

MR NICHOLAS:   Well, your Honour, it gets some support.  My learned friends would say it detracts from it in one way.  Clearly, there is no copy control mechanism involved in this case, we would submit.

McHUGH J:   I appreciate that, but what is a copy control mechanism?  Would it ordinarily be some mechanism in the work itself which prevents copying?

MR NICHOLAS:   Your Honour, it could be a mechanism in the work itself, it could be a mechanism that stands outside the work, that limits the ability to make copies of the work.  That is to say ‑ ‑ ‑

GUMMOW J:   It is not defined, is it?

MR NICHOLAS:   It is not defined, your Honour.  It is a vague expression, but it ‑ ‑ ‑

GUMMOW J:   It has this word “mechanism” though, which helps you, I would think.

MR NICHOLAS:   Yes, again, and that is plainly a matter that influenced Justice Sackville. 

HAYNE J:   But how do you relate it back to the introductory words of “device, product or component incorporated into a process”?  Relevantly in the instant case, is it identified as a component incorporated into a process?

MR NICHOLAS:   Well, when one reads on, your Honour, it must be a result that is achieved by either or both of those means, and if ‑ ‑ ‑

McHUGH J:   But in this case ‑ ‑ ‑

MR NICHOLAS:   If an applicant had to characterise it as a copy control mechanism it may be that those words would govern.

McHUGH J:   But the access code in the work itself in this case is a copy control mechanism, is it not?

MR NICHOLAS:   Your Honour, there is no access code in the work itself in this case, and that was a vital matter that was found by the primary judge.  So that the access code does not form part of the copyright work, which is why one does not – so that when the work is being reproduced without inhibition it is being reproduced, we accept, without the access code that stands on a separate part of the CD-ROM and ‑ ‑ ‑

McHUGH J:   I am sorry, I must have misunderstood you on this.  Is there no code on the CD-ROM itself?

MR NICHOLAS:   There is, your Honour.

McHUGH J:   Yes.

MR NICHOLAS:   Yes, and there is a device in the console called the Boot‑ROM which looks for the relevant code.

McHUGH J:   I understand that, but what I was putting to you is that the code in the work itself in the CD-ROM is itself a copy control mechanism, is it not, because it cannot be copied by an ordinary CD burner.

MR NICHOLAS:   Can I answer that in its two parts?

McHUGH J:   Yes.

MR NICHOLAS:   Firstly, the code is not part of the work.  It is not part of any copyright work.

McHUGH J:   I know that.  It is on a track or something.

MR NICHOLAS:   It is on a track that cannot be copied.

McHUGH J:   Yes.

MR NICHOLAS:   Your Honour, it is not a copy control mechanism because it does not interfere in any way with a making of a perfect copy of the copyright work.

McHUGH J:   I see.  So it does not interfere with a copy – yes, I appreciate that.  It does not prevent you copying the work, but it does prevent you playing it on the console.

MR NICHOLAS:   Yes, your Honour.  It is the ‑ ‑ ‑

McHUGH J:   Because it does not copy that track that has the code in it.

MR NICHOLAS:   Yes, your Honour.

McHUGH J:   Yes.

MR NICHOLAS:   And it is that latter matter that gave rise to the second and third issues in the case because if the playing involved an act of infringement then the device would be preventing or inhibiting an act of infringement in the sense that we say this expression ought to be interpreted.

Your Honours, can I take the Court to the reasons of the trial judge, Justice Sackville, in the Federal Court appeal book.  There are two appeal books, one prepared for this Court and with leave granted by Justice Gummow we have adopted the book used in the court below.  At page 186 ‑ ‑ ‑

HEYDON J:   What paragraph, Mr Nicholas?

MR NICHOLAS:   It is paragraph 114.  Paragraph 115 is critical, but if I can begin at paragraph 114 – his Honour has just identified the elements of the definition:

It can be seen that the focus of the definition, as the expression “technological protection measure” itself implies, is on a technological device or product that is designed to bring about a specified result (preventing or inhibiting the infringement of copyright in a work) by particular means.  Each of the specified means involves a technological process or mechanism.  The means identified in sub-par (a) is an access code or process that must be used to gain access to the work.  The means identified in sub-par (b) is a “copy control mechanism”.  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 of a work that otherwise could be undertaken by someone who has lawful access to that work.

This is really the ratio of his Honour’s decision on this point.

The definition, so it seems to me, contemplates that but for the operation of the device or product, there would be no technological or perhaps mechanical barrier to a person gaining access to the copyright work, or making copies of the work after access has been gained, thereby putting himself or herself in a position to infringe copyright in the work.  The definition is intended to be confined to devices or products that utilise technological processes or mechanisms to prevent or curtail specific actions in relation to a work, which actions would otherwise infringe or facilitate infringement of copyright in that work.

And then in paragraph 116 his Honour explains how he sees the word “inhibit” having work to do beyond that which is done by “prevent”, and his Honour says that:

A copy control mechanism, for example, might not prevent all copying that infringes copyright, but might limit the extent of unlawful copying that can take place, for example by reducing the quality of copies that can be made of the copyright work.  Such a device could properly be said to be designed, in the ordinary course of its operation, to “inhibit” the infringement of copyright in a work, rather than to prevent such infringement.  It may be that access to only part of a work is restricted by a process requiring decryption or unscrambling.  In this situation, too, it might be more appropriate to say that the process is designed to inhibit, rather than prevent the infringement of copyright in the work.

One of the matters we draw attention to in our written submission is the fact that the broad definition that was adopted by the Full Court does have the effect of preventing devices being used for perfectly lawful purposes that are not covered by certain of the permitted purpose provisions that I have referred your Honours to, and one example is the right to make a back‑up copy of a computer program.  Now, our learned friends say that that right extends only to - and that is still within 47C of the present Act.  Our learned friends say that right does not extend to subject matter rather than works.  There are cinematograph films here, so therefore it cannot help the appellant.  Looking at this set of provisions against the broader background, of course, it will not always be that the relevant work will also constitute subject matter other than work, and in the case of a conventional computer program, something other than a game of the kind we are concerned with in this case, the argument plainly runs. 

The back‑up copy provision, which confers on the owner or licensee of the particular copy a right to make a back‑up copy, subject to certain exceptions, absolutely, and it does so in terms that, by virtue of section 47H of the Act, prevent that right from being excluded by contract.  So if for the reason I have put moments ago, leave aside the fact that here the Sony PlayStation games have cinematograph works, there may be other answers to the point the respondents take.

McHUGH J:   One of the difficulties of the case may be that the explanatory memorandum seems to have very much departed from the statement of the objects of the Act in section 3 of the Digital Agenda Act.  Section 3 was directed to an online environment and one might have thought you read it in the context of the online environment but the explanatory memorandum, and correct me if I am wrong, spoke about technology specific rights.  It may be it goes beyond what the object of the Act is stated to be.

MR NICHOLAS:   Your Honours, both sides have from time to time relied upon the legislative history, the various reports that have been prepared and other like material, but at the end of the day, and this seems to have informed somewhat Justice French’s view, notwithstanding it was adverse to us, it is not terribly helpful to the resolution of the question of construction.  It is not a matter we took up in our written document, your Honour, but in those circumstances one can see why the object of the Act as expressed in the Act against the background, which on one view is quite confusing, with various inconsistent signals being sent, that statement is significant.

McHUGH J:   Four of the objects of the Act specifically refer to “online”.  We are not dealing with online here, are we?

MR NICHOLAS:   No, we are not.

McHUGH J:   Paragraph (e), the fifth one, talks about the Internet.

GUMMOW J:   What they put in as Division 2A, 116A and following, does not appear to be covered by an object.  That is not necessarily against you.

MR NICHOLAS:   Your Honour, we would submit it is a reason for not adopting an expansive interpretation of the relevant words where there is no clear indication given either in the legislative material or in the objects to what it was intended to cover.

GUMMOW J:   It may be - we do not know what happened - that some compromise was hammered out, not in public, and this is the product of it, and none of the legislators wanted to be upfront about it.

MR NICHOLAS:   Yes, your Honour.  There is no clear guidance to be had from either source.  We do say that it is significant that the interpretation that has been adopted by the majority below is one that does circumscribe the exercise of lawful rights.  It expands in ways that, as I indicated before, could not be explored in an evidentiary sense, the capacity of a copyright owner to get more from his work, and when I say get more from his work, get more than what traditionally comes with the grant of the exclusive rights under this Act.

For example, I have referred to the back‑up copy argument.  Justice Lindgren had an answer to that, which we submit is, with great respect to him, flawed.  We have dealt with that in the written submission and I will not go to it now.  In addition to the back‑up copy point, we also know that one can lawfully import for non‑commercial purposes games of this kind, CD‑ROMs of this kind.  The effect of the majority’s interpretation of this section is to preclude a person from gaining access to a device or a console which would enable copies imported, private collections, whether imported personally or by mail, to be used in this country.

GUMMOW J:   How do the parallel importing provisions apply to these computer games, if they apply at all?

MR NICHOLAS:   I might need to take that on notice, I am sorry, your Honour, but they ‑ ‑ ‑

GUMMOW J:   And the cinematographic films, I suppose.

MR NICHOLAS:   I will need to take that on notice.  May I do that, your Honour?

GLEESON CJ:   You can give us a written note about that.

MR NICHOLAS:   We will do that.  To the extent they do apply, the argument is ‑ ‑ ‑

GUMMOW J:   As I understand it, one of the matters that agitated the ACCC when they were involved in this case – they no longer are – was the use of this legislation, these particular provisions here, to prop up market divisions, as it were.

MR NICHOLAS:   Yes, your Honour.  The position is that when one looks at the technology, one cannot go and buy a console in this country and play Sony games that one has acquired in the United States.  It is unlawful for someone, on this interpretation of this legislation, to supply you with the means of doing so.  So that point in relation to that specific example – and there are others that can be postulated – and the back‑up copy point are what lead us to say that section 116A(7) is, against that background, providing a fairly strong indication that this section is concerned with the prevention or inhibiting of acts which would otherwise constitute an infringement, because the permitted purpose provisions simply have no scope to operate at all if they are not being used to permit an act which would otherwise constitute an infringement. 

We have, in the written document, attempted to summarise – and in quite uncontroversial terms, I can say – the nature of the technology.  That appears under “Narrative Statement of Facts”, part 7 and following, but if your Honours would be assisted in me working through this to some extent, I can do so quite briefly.  The position is that a Sony PlayStation is not like a general computer; we refer to it as a “special purpose computer”, and that is because it has a fairly specific and dedicated use.  It does not lend itself to the general uses that can be made of a desktop or laptop computer and that becomes very relevant when one comes to the second issue concerning reproduction in material form. 

So far as that point is concerned – I should bring this out now – as found below, and this is not the subject of disagreement, one cannot inspect the contents of the RAM in the special purpose computer unless one wants to, in effect, develop new technology for the purpose of doing so.  In effect, one cannot take the console, as supplied by the respondents, and inspect or have access to or regard to the contents of the RAM.  The position in relation to a general purpose computer is quite different, usually and that is an important distinction so far as these devices are concerned because, coming to the second argument, one cannot say that the computer program, to the extent that it is at any time in the RAM of the Sony PlayStation, can be reproduced from that mechanism. 

The device consists of the console itself, a central processing unit, some graphics processing units, some read‑only memory devices, including what I referred to as the Boot‑ROM, the Boot‑ROM being the particular device that enables the console to look for the access code on the disk.

The access codes of course, as used by the respondents here, are not access codes that are used for the purpose of differentiating between an infringing copy and a non-infringing copy.  There are access codes that are used for the purpose of differentiating between the particular region in which the copy was released.  In paragraph 11 we have explained how it comes about that one cannot play on a PlayStation console acquired here, copies of games acquired overseas without the use of some device or without making some modification to the console.

KIRBY J:   I understood what you have said about the way in which that divides the world, unlike the Popes of old, not into two but into three.  But what is the overall policy objective of doing that?  Is it just to make it difficult for those who seek to do what your client did, to succeed on a large scale in different parts of the world?

MR NICHOLAS:   I think the correct answer is that there is no evidence at trial which throws any real light on that ‑ ‑ ‑

KIRBY J:   Or is it just something like television systems, that they are different in different countries?

MR NICHOLAS:   The access code, we accept, and there was a finding made by the primary judge which is not challenged ‑ ‑ ‑

McHUGH J:   One could make a guess that probably one of the objects is to allow pricing differentials in various regions.

MR NICHOLAS:   One of the objects, your Honour, and whether or not it is an object in this case, it is certainly an opportunity ‑ ‑ ‑

GUMMOW J:   That is irrelevant.  We just have to construe the section.

MR NICHOLAS:   That is so.  It certainly presents an opportunity and in that sense, it is quite irrelevant what the respondent here may or may not have intended to achieve with its device, although the section does of course refer to the ordinary operation of the device being one that prevents or inhibits infringement. 

So, unlike the United States legislation which contains a much broader prohibition on the use of any such device which is not related in any terms at all, backed in any terms at all to the object of checking infringement, here we do have these words that do require that there be some connection between the protection of the copyright and the use of the device.  But on the interpretation that has been adopted below, given that in these settings manufacturers of equipment of this kind will typically be acting for a variety of purposes, it is a very, we submit, wide opportunity being presented that would enable this section to be used for the purposes of carving up the world into regions, as has occurred here, for marketing purposes, not just for the purposes of protecting copyright.  That is a reason, we submit, for being cautious and ultimately not adopting the wide construction that is being advocated in relation to the definition of “technological protection measure”.

HAYNE J:   Why?  Why is it a reason for caution?

MR NICHOLAS:   It is a reason for caution, your Honour, because one would not lightly infer, we submit, that the legislature would be prohibiting the manufacture or supply of devices which can be used for lawful purposes.  The devices can be used for lawful purposes, amongst other things, for making available in this market copies of copyright works distributed in other markets by means of a console that is acquired in this market.

GUMMOW J:   How does “fair dealing” fit in with this?

MR NICHOLAS:   Your Honour, we say that ‑ ‑ ‑

GUMMOW J:   It is not specially dealt with, is it?

MR NICHOLAS:   It is not specially dealt with at all, and, as we say in the written submission, your Honour, it is not a case where one can readily postulate examples where one might wish to make a fair dealing of what one finds on the Sony Playstation disks.  I do not say that it is not possible, but, certainly, if what was on that disk was a literary work of a more conventional character – not a computer program, but perhaps literary works, artistic works, information that has been reduced so as to attract copyright protection in the first place – that is the type of material which, of course, does lend itself, and has always lent itself, to the exercise of the fair dealing rights conferred by this Act. 

Again, on this interpretation, notwithstanding that the device in question was to be used for the purpose of enabling those rights to be exercised, one could not obtain access to the device that was needed for that purpose.  The result would be that the fair dealing provisions and the rights conferred by them would be thwarted and denied to the people who were wishing to exercise them.

GUMMOW J:   Is that not going to happen anyway?

MR NICHOLAS:   Not ‑ ‑ ‑

GUMMOW J:   In other words, giving the words “prevent or inhibit” the operation you want to give it, will not fair dealing be adversely affected anyway?

MR NICHOLAS:   Yes, your Honour, but not so extensively.

GUMMOW J:   That is what your point has to be, is it not?

MR NICHOLAS:   Yes, your Honour.  Not so extensively, but it would ‑ ‑ ‑

GUMMOW J:   So those interests who rely strongly on traditional fair dealing in section 40 of the Act, they did not manage to get themselves into ‑ ‑ ‑

MR NICHOLAS:   The permitted purpose provisions.

GUMMOW J:    ‑ ‑ ‑ into the permitted purpose provisions.

MR NICHOLAS:   That is so, your Honour.  I rely on that when I come to section 116A(7), because that section does seem to contemplate that the permitted purpose provisions are concerned with the use of devices to perform acts that would otherwise constitute infringements of copyright.

GUMMOW J:   But a “fair use”, by definition, does not involve an infringement. 

MR NICHOLAS:   Precisely, your Honour.  We would submit that in those circumstances there is an indication that the permitted purpose provisions were not directed to situations which would not involve acts of infringement.

A second question that arose in the appeal concerns the meaning of “material form”.  The question arose for consideration in this case against the background, as I say, of a special purpose computer where, as was held, the computer program on RAM, encoded on the RAM at the time the console has been played, is not a work that can be reproduced from the former storage that we accept RAM is.  It is true that we accept that RAM is a form of storage.  What we say takes the form of storage outside of the definition of “material form” in the Act, as it stood prior to 1 January, is that it is not a form of storage from which the work, or a substantial part of the work, can be reproduced.  That submission was upheld at first instance, and by majority in the Full Court.  It arises on a notice of contention ‑ ‑ ‑

GLEESON CJ:   Normally, we would hear an argument from the appellant on a point on which the appellant won below on reply, if we needed to.

MR NICHOLAS:   Yes, your Honour.  If your Honour pleases, the cinematograph film argument is of the same character.  It is dealt with in the document, and, on the same basis, I will not deal with that now. 

Your Honours, at the end of the day, there is not a lot more that can be said about the question of construction that arises.  We have dealt with it in the written submission, and I do not propose to work through it, to say more than I have this morning.

GLEESON CJ:   Yes.  Thank you, Mr Nicholas.

KIRBY J:   I know that you argue that we have to define the purpose by reference to the language, but if one is looking at the purpose of Parliament, as it were, in the general, it would appear to be to protect the copyright owner against invasions such as your client was endeavouring.  It may be that it overreaches, that may be a misfortune, and it may be that one reads copyright laws so that it does not overreach, because of the balance of the interests involved.  But, if one looks at it in social terms, the object would appear to be to prevent people like your client reducing the economic value of the product, which I see is described as “exceedingly popular”, though I have never had the pleasure myself.

MR NICHOLAS:   Yes.  Well, your Honour, that involves defining the object in extremely broad terms, which, of course, would  ‑ ‑ ‑

KIRBY J:   That is what politicians and Parliaments tend to do.

MR NICHOLAS:   Well, yes, your Honour, but it is here a balancing act, and what one can derive from the second reading speech, in particular, in terms, is that the government was mindful of the need to balance the competing interests that arose here.

KIRBY J:   There was a difference between the Andrews Committee and the legislation that was enacted.  Is that difference helpful for this argument?

MR NICHOLAS:   We submit it is not, your Honour.  We had originally tried to draw some support from the legislative history, as our learned friends seek to do, and Justice Lingren found some, Justice French did not.  At the end of the day, we say that it is too much a matter of speculation when one starts to investigate that material, by reason of its extensiveness and its diversity.

KIRBY J:   Would you answer my question.  In terms of an economic analysis of this case, here is a company with an exceedingly popular product that introduces this form of endeavour to prevent people, as it were, invading their intellectual property and Parliament provides by its enactment language which, at least on one view, can apply to it as three judges of the Federal Court have held.  Why would one take a view that defeats that purpose?  I realise that my view in The Panel was not a majority view and it has been criticised in the article by Kimberlee Weatherall as insufficiently attentive to the other interests that are at stake here, but if one is looking in economic terms at the facts of this case, it would seem that the Parliament’s endeavour was to do precisely what the majority in the Full Court upheld.

MR NICHOLAS:   I respectfully submit that one cannot draw that inference at all.  The Parliament has enacted legislation, and it is to be construed as best it can having regard to the objects and to the extent ‑ ‑ ‑

KIRBY J:   The Court keeps saying it is to be construed in a purposive way. 

MR NICHOLAS:   Yes, your Honour, but ‑ ‑ ‑

GUMMOW J:   This may be a field in which it is hard to discern purpose because of the complexity of the competing interests, very powerful interests, which are resolved in an unspecified fashion other than through the production of this statute.

MR NICHOLAS:   Yes, your Honour, but in addition we would say that it is not a case where one should be looking at specific sets of facts and saying for the purpose of interpreting the legislation, we think this device should be covered and therefore we will interpret it expansively, because, while in this particular case it might, based upon some view as to whether Parliament would have this particular device curtailed, that may not be so of other devices which are caught by the same interpretation.  Like everyone, the technique the respondents here have adopted for protecting their copyright work will either stand or fall, having regard to the view that this Court comes to as to the proper construction of this provision, informed by much broader considerations than whether Sony is going to be deprived of some revenue in this very specific factual scenario. 

As I said earlier, one of the difficulties that arises in a case like this is that one cannot really go into evidence in relation to the types of scenarios where one might say Parliament surely would never have intended that type of activity to be curtailed, because it does involve speculation and conjecture and often interpreting legislation against a background of what are at the present time technological possibilities.

McHUGH J:   But given the limited purposes for which you can make a back-up copy under 47C, if your argument is correct, would the Act cover Microsoft’s activation code on its Windows XP program?

MR NICHOLAS:   Yes, your Honour, it would.  Take that as an example.  If I go and buy a computer program, let us say it is a Microsoft program, typically it is protected by a copy control mechanism.  I put it into my computer, I cannot copy it onto my hard disk until I have entered the access code and, subject to other things, that would be covered.

McHUGH J:   So it is covered under (b) is it, rather than (a).

MR NICHOLAS:   Yes, (b) certainly, possibly (a) as well.

GLEESON CJ:   Yes, thank you, Mr Nicholas.

MR NICHOLAS:   May it please the Court.

GLEESON CJ:   Yes, Mr Basten.

MR BASTEN:   Your Honours, the points we want to make in relation to the statutory construction argument obviously flow from the terms of the Copyright Act.  The Copyright Act itself reflects a balance between the interests of copyright owners and users.  There is no need, as we would understand it, to seek to identify those interests separately.  Everybody knows that the balance is to be achieved and it is there in the Act.  Of course, the interests are not separated necessarily.  A researcher in a university has an interest both in protecting copyright in his or her own work and having reasonable access to works produced by others, so that my own clients have in their own terms accepted the appropriate balance to be found in the Act, and work with it.

The policy issue which we derive from the extrinsic material is that Parliament sought to maintain through the Digital Agenda Act the balance which had already been established, so that the overriding principle of construction that we seek to present to the Court is one which seeks to maintain the balance between the rights of owners and users.

Might I also say by way of introduction that the factual matrix in this case is quite limited in the part of the broad field of digital material in which it appears, but its significant element for present purposes is that it operates in relation to an acquired product, in other words, offline use.  One of the apparent difficulties with the legislation is that the Parliament envisaged as the Court has noted in the objects of the 2000 Act that it was dealing with material online, and some of the conceptual framework that it introduced does not readily translate into offline usage in the same way that it may operate online. 

The measure used by Sony in this case constitutes, in effect, the creation in the console of a system for playing Sony games which ensures that games are only played on the customised hardware or console.  If the game is played on an unmodified Sony console, then the access code controls use or apprehension of the work. 

Although Sony has vacillated in the course of the earlier part of these proceedings and Mr Nicholas suggested there might still be some vacillation, as we would understand it, it is only the combination of the unmodified console and the access code on the game CD-ROM which can constitute a relevant protection measure.  In other words, to produce a clone of the console without the Boot-ROM or to override, as was the activity of Mr Stevens, the Boot-ROM on a Sony console as marketed, prevents the measure working.  It is that activity, either form of the activity, which prevents the measure working as a protection device.  As we understand it, this case was run on the basis that this is a circumvention device if a technological protection measure exists.

When one then comes to the scope of the statutory provisions, may I just note in relation to 116A, to which your Honours were taken, that there is clearly work intended to be done by paragraph (1)(a).  As your Honour Justice Gummow, I think, noted:

this section [only] applies if:

(a)      a work or other subject-matter is protected by a technological protection measure –

Now, in the argument that has taken us back to the definition of “technological protection measure”, may I just note that the unlawfulness of the conduct addressed in this case is not only civil, but also criminal.  That, of course, has some consequences for one’s ultimate statutory construction.  Section 132(5B), which appears at page 159 of Reprint 10, if that is the one your Honours are using, at the bottom of the page, reproduces in substance the operative parts of subsection 116A(1)(b), but does not reproduce paragraph (a).  In other words, what happens when one gets to the criminal conduct is that one generalises the conduct so that it need not be within respect to any particular work or other subject matter.  The criminality flows from the purpose of creating the device.

That has some relevance, we submit, in relation to how one approaches the definition of “technological protection measure”, which, of course, constitutes an essential element of the criminal conduct.  The possibility that your Honour Justice Hayne put to my learned friend was that in substance paragraphs (a) and (b) were an exemplification, perhaps an exclusive exemplification, of the kinds of devices or products which the section was designed to pick up.  Now, in a sense, we are happy to accept what your Honour puts, but with the qualification that they are in terms, and we would say intended to be, mechanisms which limit or give effect to perhaps the chapeau to the provision, and that one should pay primary attention to that terminology, which talks of:

a device or product, or a component incorporated into a process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work or other subject‑matter by either or both of the following means –

In other words, it must be ‑ ‑ ‑

GUMMOW J:   To what is the word “by” attached?

MR BASTEN:   At the end of the second last line?

GUMMOW J:   Yes, “by either or both”.

MR BASTEN:   I think it attaches to (a) and (b), although (a) repeats “by”.  That seems to be a grammatical error.

HAYNE J:   Why do you not attach “to prevent or inhibit” to the words “to prevent or inhibit by”?

MR BASTEN:   Yes.  May I say one thing about the argument I am putting.  I do accept that the semantic discussion can ultimately go in different directions, and I am going to come back and say something about why we favour the result achieved by Justice Sackville, but what your Honour Justice Hayne is putting to me is that that is the mechanism by which the prevention or inhibition takes place, I think.  If that is so then I accept that, of course.  That must be the grammatical reading of that provision, I think.  Unless your Honour is putting to me that it has some greater effect than that, that is my argument. 

What I come back to saying is that the product which operates in this way must be designed with a specific purpose in mind, namely, to prevent or inhibit the infringement of copyright in a work.  Now, what one obviously has, and particularly in a case like this where there are controls on regional access and so on, is that a particular measure may be designed for more than one purpose and it may operate in more than one situation.  That was the discussion that was had before as to whether or not there is an overreach on the part of the manufacturer in adopting a measure which does not necessarily prevent only infringement of copyright but prevents or inhibits fair dealing with copyright material.

At the end of the day I do not know that we can suggest a form of measure which would have the effect of preventing or inhibiting infringement which might not have other effects.  It is difficult to envisage what the Parliament could have intended.  One is left then with the question of whether the extent of the overreach in a particular situation suggests that it is designed for some other purpose than the prevention or inhibition of copyright.

GUMMOW J:   There is a question as to these words in commas, “in the ordinary course of its operation”.  Are they linked to “designed” or, more readily, to what follows, “to prevent or inhibit”?

MR BASTEN:   I am not sure whether in a practical sense it would matter which answer I gave to your Honour’s question.  I do not know whether it is strictly an alternative.  The design is for a purpose but the measure which is so designed must have a particular ordinary course of operation.

GUMMOW J:   Yes.

MR BASTEN:   I think that there is an explanation of why those words were introduced.  I think it was intended to overcome the possibility that the measure might be interfered with and then have a different course of operation.  That is discussed in one of the authorities, I think.  On this approach there is a danger, we would say, in isolating and seeking to identify the scope of the provision by reference to what appears to be a key word in a particular circumstance and in this case it has been said to be “inhibit”.

There is no difficulty in seeing the clause “to prevent or inhibit the infringement” as involving a greater and a lesser element of the same activity.  In other words, prevention assumes effectiveness.  The word “effective” at one stage was included in the definition.  Inhibition suggests something which is less than totally effective but puts a hurdle or obstacle in the way of the infringement.  What Justice Sackville seeks to say, I think, is that one looks to a physical or technological prevention or inhibition of the actual act of infringement rather than a psychological discouragement.

True it is that inhibition might cover something like a psychological discouragement if read on its own.  Read in context, we would see it as having a more restricted and constrained connotation.

Your Honours, we say that the primary judge’s conclusion was right, for a number of reasons.  Firstly, his Honour appears to have adopted a purposive construction which does focus on the protection against infringement of copyright in the chapeau, and treats paragraphs (a) and (b) as a means to that end, not as ends in themselves.  That, we say, is consistent with the focus of this Act as a copyright Act.  It also focuses on the avoidance, and this is the correlative to the first point, of giving a right to control access when the section is applied or the definition is applied to a copy of a work already acquired by a user, and that, we say, is the alternative situation to the control of access online to which the objects of the 2000 Act seem to be directed.

HAYNE J:   Take perhaps one of the central operations of the provision.  A device designed to prevent infringement by ensuring access available solely by use of access code.  What is the relationship that is being drawn between the device and “designed”?

MR BASTEN:   Yes.  Well, the answer to that may vary for the reason I was just seeking to address, namely that whether the “ensuring”, which is itself a strong word, was intended by the drafter consistently with the objects of the Act to be dealing with access online, which is an understandable explanation, may give rise to a different answer when one is considering access offline.  It is in the case where the customer already has acquired, legitimately, let us assume, a copyright work and seeks apprehension of that work, that too broad a construction to the terms of this provision will ultimately provide the copyright owner with a right to control all forms of apprehension going well beyond the control of reproduction of copyright material, as protected by the Act, and the fair dealing example is, of course, the example to which one tends to come back.

HAYNE J:   But does it include the case where access to the program on the CD‑ROM cannot be had until first you activate the CD‑ROM by particular access code.

MR BASTEN:   In a mechanical way.

HAYNE J:   Yes.

MR BASTEN:   In a technological way.  Well, that is this case, your Honour.  The answer we would say is that reading the terminology there, the answer may be yes or no.  It obviously could be yes.  We do not quibble with the construction of the Full Court in saying that this is a meaning, which is available on the words of the section, of the definition.

HAYNE J:   And at what point of the words in the definition does the fork come where you choose yes or no?

MR BASTEN:   The fork comes by giving primary operation to the chapeau and asking is that what it is designed to do, or is it designed to do something quite different, namely, simply to discourage by preventing ready use of an infringing copy after the infringement has taken place and the copy has been acquired by somebody else.  In other words, you diminish the value of the infringing copy because nobody can use it unless they take another step, which is to get a mechanism which will play the copy other than the Sony authorised console.

GUMMOW J:   What force are you giving to the work “protected” in the section?

MR BASTEN:   In section 116A?

GUMMOW J:   Yes, “protected by a technological protection”.  That is what we are really construing.

MR BASTEN:   Yes.  We would say, your Honour, that once one identifies a work which is protected, reads that in combination with the definition of “technological protection measure”, it is clear that the protection is protection of the copyright work from infringement.  That is how the chapeau to the definition would work.  So that although it would be open to say in this case that mere discouragement of the use of an infringing copy may in some circumstances inhibit the original infringer, that is not the initial or primary purpose of the section, and to give it that meaning is to have the effects which go beyond the protection of copyright.  There is a helpful analysis of why we say that in Professor Ginsburg’s article which we quote a passage of in the written submissions and to which I will not seek to return.  Your Honours, the only other comment ‑ ‑ ‑

KIRBY J:   Do we have that full article?  I read the extract.

MR BASTEN:   Yes, we have provided a copy of it to your Honours.  Might I say that the policy issues which underlie this legislation have of course been addressed in Europe and America, amongst other places.  We have provided a copy to your Honours of an article by Mr Vinje which outlines some of the European perspective, and I think we will if we have not provided a copy of an article by Professor Samuelson which sets out some of the background of the American debate.

GUMMOW J:   Do we need to look to the WIPO Treaty?

MR BASTEN:   We would say no, your Honour, not particularly, because the treaty does not prescribe in precise terms how it is to be given effect, and clearly the Australian Parliament has adopted a particular approach.  But the treaty leaves open the mechanism by which the balance is to be maintained, and we say that Australia has sought to maintain it in a particular manner and there is nothing inconsistent with the copyright treaty in that respect.

Just in relation to your Honour Justice Gummow’s question on parallel importation, I think the answer is that it does not apply, and one finds that in section 44E of the Act.  Curiously, that was introduced by the Copyright Amendment (Parallel Importation) Act No 34 of 2003, which I think commenced in May of 2003, that is, after the facts which were the subject of this case, and therefore I do not know that consideration was given to it in the construction argument.

MR NICHOLAS:   Criminal sanctions?

GUMMOW J:   Yes.

MR NICHOLAS:   Yes, your Honour, in 132(5B), I believe.

GUMMOW J:   Yes, thank you.

MR NICHOLAS:   What we would observe, and Mr Basten may have made the point about that provision, is that the requirement of knowledge goes to the question of whether or not there would be a circumvention of a device, not whether or not there would be an infringement of copyright so it has very broad operation, potentially. 

Perhaps against that background we have not contested the correctness of Galaxy in the Full Court but Galaxy is very different to this case in a number of significant ways.  It does, of course, raise the question of cinematograph film and the way it applies to video games but Galaxy was not concerned with substantiality at all because in the case of Galaxy the infringing articles were EPROMs or hard‑wired chips.  It did not raise any question of reproduction in RAM at all and these chips had been imported in their entirety.  So no question of whether or not there had been a reproduction in substantial form arose in Galaxy.

The absence of evidence that one might have expected to see at the trial hearing in relation to the principal point decided in Galaxy complicates the issue of substantiality, but we submit that that is a problem for our learned friends, rather than us, because the Court is in a position where it is not able to look at the evidence for the purposes of determining whether or not there has been a substantial taking of what was alleged to be a cinematograph film, and determine, well, what are the particular images?  What is that part of the film which is in RAM at a given moment in time, and is it substantial, or is it insubstantial? 

The reason I say that is that we know that the images that constitute the data that is in RAM at some stage is manipulated by the program.  So one cannot know, absent some expert evidence, without perhaps engaging in some measure of guesswork, what is an image that formed part of the original film that has been embodied in RAM, and what is the creation of the computer program?  And, beyond that, what is the creation of interaction between the computer program and the user? 

The whole question of substantiality is left to be decided in the light of what we say is this quite contrived and unsatisfactory situation, where all that is done is a game is played, a disk is removed from the console, and the Court is invited to draw inferences about what part of the cinematograph film is in RAM at a particular time, and whether or not that forms a substantial part of the whole. 

We submit that it is not surprising that there has been no finding made up until this point of a substantial taking of the cinematograph film against the background of that evidence.

KIRBY J:   Why do you say that?  Where else does the image come from?  By magic?  Is it in the air?  I mean, really, you have to use your commonsense here and draw inferences as judges do all the time.

MR NICHOLAS:   Yes, your Honour, but we know that ‑ ‑ ‑

KIRBY J:   We saw the disk in.  We saw it taken out.  We saw the image projected and it was a full playable game.

MR NICHOLAS:   No, with respect, your Honour, it was not a full playable game that your Honours saw.

KIRBY J:   W did not see the full game but we were told that it was one full game.

MR NICHOLAS:   At no stage did your Honours see a full game loaded in RAM.  Your Honours were watching a part of a game, but the point we make is that that game as was projected on the wall today is the outcome of a complicated technical process that involves taking some existing images, projecting those and then manipulating those as well and then deploying those again and at another level it involves interaction with the user.  So that if one could sit down and look at a catalogue of the total images that were in the film, that were in the work to begin with and say, “All right, we can now see where it begins and ends.  We can see what relationship the images that are in RAM at any particular moment bear to the whole”, some meaningful conclusions could be drawn but, in our respectful submission, not on the basis of these demonstrations.

We do say that the games have obviously been selected to make points for the purposes of the section 116A case.  They have been deployed in the course of these demonstrations in particular ways and this is not said critically ‑ ‑ ‑

KIRBY J:   That is what cases are all about; what courts are all about.  The party has one case to try to advance its cause and you have entitlements to reply.

MR NICHOLAS:   Your Honour, it goes to the question of the representativeness of what one sees given that such a small selection of work is presented for the purpose of justifying a proposition that this device is intended to prevent or inhibit infringement across the whole catalogue of films.  Mr Stevens, on one view succeeded, our learned friends disagree but on one view he did, in demonstrating that there are some games where what was attempted today cannot happen because you take the disk out of the console and the game stops and that, in our submission, is an important matter.

Your Honours, in relation to the question of substantiality, we do say, because originality is not a relevant touchstone when we are dealing with a cinematograph film, that the purpose for which the reproduction is occurring, and we say purpose at an objective and technical level, is a relevant consideration.  It is not, of course, Mr Stevens or Mr Nabarro’s purpose, but one asks why is that part of the work being reproduced in RAM and the answer to that on the evidence is at a technical level it has been there because RAM is being used as a buffer, as a storage place, not for the purposes of copying in any conventional sense or for the purposes of exploiting the work commercially.  It is simply being used in the same way a book is being read. 

GUMMOW J:   I am not sure how substantiality really gets into a 116B case, or a 116A plus B case.  You are not talking about infringement of particular works or subject matters, are you?

MR NICHOLAS:   Yes.  Well, I am ‑ ‑ ‑

GUMMOW J:   What you have been saying is rather tending that way.  For all we know, Sony makes thousands of these games.

MR NICHOLAS:   That is so, and what they needed to show was, on our interpretation of the section, that it prevents or inhibits infringement in the ordinary course of its operation.  The infringement they rely upon is the infringement of their cinematograph films, and the case came down to an argument about substantiality in relation to one or two films.  But even if that is resolved in their favour, that does not get them there, because one cannot, on that material, extrapolate as one would need to do.

Your Honours, we have dealt with the question of embodiment in our written submissions and section 24. We submit, for the reasons that were given by Justice Lindgren, that there is not an embodiment of the

images in RAM in the necessary sense.  The RAM, acting as a buffer or a transit station, if you like, is not something that has been treated in relation to the visual images so that the images are capable of being reproduced.

KIRBY J:   Is this not all in your written submissions at 18?

MR NICHOLAS:   Yes, your Honour, it is.  Unless there is anything further, your Honour, they are our submissions in reply.

GLEESON CJ:   Thank you, Mr Nicholas.  Is there anything arising out of that?

MR CATTERNS:   No, your Honour.  I just wondered if the Court would be assisted by a brief written submission on the meaning of the word “access” as raised by his Honour Justice Gummow and I think Justice Hayne.

GLEESON CJ:   Any party who wants to put anything in writing on that can do so within seven days.

MR CATTERNS:   May it please the Court.

GLEESON CJ:   We will reserve our decision in this matter and we will adjourn until 10.15 tomorrow morning.

AT 4.27 PM THE MATTER WAS ADJOURNED