Telstra Corporation Limited & Anor v Phone Directories Company Pty Ltd & Ors

[2011] HCATrans 248

[2011] HCATrans 248

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M5 of 2011

B e t w e e n -

TELSTRA CORPORATION  LIMITED (ACN 051 775 556)

First Applicant

SENSIS PTY LTD (ACN 007 423 913)

Second Applicant

and

PHONE DIRECTORIES COMPANY PTY LTD (ACN 059 776 091)

First Respondent

AUSTRALIAN LOCAL DIRECTORIES PTY LTD (ACN 078 856 318)

Second Respondent

ADAM HARGRAVES

Third Respondent

GLENN HARGRAVES

Fourth Respondent

DANIEL STOTEN

Fifth Respondent

LOCAL DIRECTORIES PTY LTD (ACN 130 550 971)

Sixth Respondent

Application for special leave to appeal

GUMMOW J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 2 SEPTEMBER 2011, AT 11.21 AM

Copyright in the High Court of Australia

____________________

MR N.J. YOUNG, QC:   If the Court pleases, I appear with MR S.M. REBIKOFF for the applicants.  (instructed by Mallesons Stephen Jaques)

MR C.D. GOLVAN, SC:   If the Court pleases, I appear with MR S. RICKETSON for the respondents.  (instructed by Middletons)

GUMMOW J:   Yes, Mr Young.

MR YOUNG:   This case raises, in our submission, a short but important question concerning the test to be applied to identify an original literary work where an important step in the compilation is taken by a computer.  In our submission, the Full Court narrowed the concept of origination from that which has been previously understood in the authorities.  In effect, the Full Federal Court held that copyright could not subsist in a compilation where the step of selecting and arranging the data was performed by a computer program, notwithstanding that other elements of the compilation were the product of human intellectual effort.

That effort was manifest in two respects.  First, in the collection, formulation, checking and making of entries and their arrangement under headings in the case of the Yellow Pages, which is all done by human action, as the trial judge found, and, secondly, there was human intellectual effort in choosing, customising, setting out specifications and formulating rules as to the operation of a computer system which effected the selection and arrangement in material form.  In our submission, that narrow approach of the Full Court is a departure from the observations made by this Court in IceTV and it stands in direct tension with observations of the Full Court of the Federal Court in Desktop Marketing. 

The approach of the Full Court can be illustrated most vividly by the judgment of Justice Perram, but also in the other two judgments of the Chief Justice and Justice Yates.  In effect, our submission is that they lost sight of the statutory question under section 32(2), which was essentially that each published literary work needed to be established to be an original literary work.  That is the statutory question.  Instead, their Honours posed the question as to whether the step of selection and arrangement was taken by individuals or was the product of a computer software program.  Can I go to the reasons in the judgment of Justice Perram firstly.

GUMMOW J:   I take it you do not support paragraph 127?

MR YOUNG:   Paragraph 137, your Honour?

GUMMOW J:   Paragraph 127, on page 178, particularly in the last couple of sentences.

MR YOUNG:   We submit that what your Honours said in IceTV was correct and insofar as there is any suggestion that that was other than a statement of legal principle, we would not embrace it, your Honour.  I did want to show, through Justice Perram, the error of the Full Court’s approach starting with Justice Perram at paragraph 112.  In fact, I will start earlier, if I may, your Honour, page 168, paragraph 104.  Having said in paragraph 103 that there was intellectual effort in the collection phase, his Honour then posed the question in the first line of 104, is that relevant to the issue of originality of the directories, and his Honour said it is not.  His Honour then explained why.  He expressed that view, notwithstanding both Desktop Marketing and IceTV. 

His Honour referred in paragraph 106 at the next page to the statement in Desktop Marketing that the steps of collection, et cetera, are relevant, that is, there is no principle that they are irrelevant, and a similar statement by Justice Sackville.  In IceTV, Justice Perram referred to the statement by Justices Gummow, Hayne and Heydon at the bottom of the page, that:

“the author or authors will be those who gather or organise the collection of material and who select, order or arrange its fixation –

In effect, the Full Court ignored the conjunctive and focused solely on the question of who or what did the selection for arrangement.  Notwithstanding those principles that are cited, Justice Perram adopted a different view.  In paragraph 111, his Honour said:

the question of what role their Honours [in IceTV] did have in mind for the contribution –

is raised for inquiry.  At line 30 –

The sentence [from the High Court] certainly suggests their efforts are not irrelevant –

and the tangle his Honour gets into is then evident at the next page, page 172.  At about line 4, his Honour seems to accept that:

efforts which attend the collection of the material for a compilation may well show the compilation itself to be “original” –

which is the statutory requirement.  But then at 112 he says –

Once one accepts that the focus of the copyright is on the creation of the material form by an author it is analytically difficult to identify any role for labour or skill in the collection of material beyond the question posed by the statute, namely, whether the work is “original” –

and that should have been the end of it, but his Honour went on to say, a few lines down –

It follows that, beyond showing that the directories were original in the sense of not having been copied, the activities in the Collection Phase are not relevant –

The other justices’ judgments are not so elaborate but they apply the same approach.  Chief Justice Keane, firstly, at paragraphs 89 and 90, there are really two steps in the reasoning.  In 89:

The compilation of the directories was overwhelmingly the work of the Genesis Computer System –

because it did the selection of the book extract stage and then having stated that as if that is the only thing relevant, his Honour then said at paragraph 90, they were:

not compiled by individuals but by the automated processes –

Justice Yates, like Justice Perram ‑ ‑ ‑

GUMMOW J:   What do you say about paragraph 167 of Justice Yates’ reasons?

MR YOUNG:   That is what I was immediately coming to, your Honour.  Justice Yates’ reasoning starts at 166, that the intellectual effort in collection, entering and manipulating data is the underlying fabric, line 4 of 166.  His Honour then describes the computer system as not a mere tool and the computer system is being transformative, in other words, the most fundamental contribution to the compilation, but his Honour accepts at 169 that it is not the only authorial contribution to the originality of the work.  In the middle of the page in paragraph 169, his Honour says:

The contribution of the essentially computer‑generated “Book Extract” process was of such overwhelming significance to the expression in material form ‑ ‑ ‑

GUMMOW J:   But the last two sentences of 168 may be important, I think – or the last three sentences.

MR YOUNG:   Your Honour, it may be so that the customised computer program might have been the subject of a different claim for copyright, but that does not deny that the question that is in issue, which is, how do you assess the originality of the published literary works, the directories, and do you narrow the inquiry into originality by focusing only on the last step of the selection process effected by a computer program or do you look more widely, as the High Court did in IceTV and the Full Federal Court did in Desktop Marketing, taking into account all of the intellectual effort in the making and formulation of the entries, the selection of the headings in the Yellow Pages under which entries are collected, the customising of the computer program, all of which intellectual effort contributes to the originality of the whole, the end product.

BELL J:   Looking at Justice Yates at 169 at the sentence beginning “The contribution of the essentially computer‑generated ‘Book Extract’”, can I direct your attention to the respondents’ submissions in paragraphs 36 and 37, application book 228.

MR YOUNG:   Yes, your Honour.

BELL J:   What is put there in 37 is that:

Prior to the activation of the Book Extract production process, there was no selection or arrangement of the relevant listings –

and so forth.

MR YOUNG:   That is largely but not entirely correct what the respondents say.  In the case of the White Pages, there was no selection made until the computer‑generated book extract process.  That is not so in the case of the Yellow Pages, as the trial judge found, because the manual exercise had already been undertaken, the collection phase of allocating the entries under various headings, plumbing, carpentry, et cetera.  There had already been an organisation and selection and arrangement of the material in the case of the Yellow Pages and instructions were recorded when those entries were made as to the headings to which they should be allocated.  Furthermore, your Honour, the actual selection and arrangement, albeit done by a computer program, is a computer program that has been chosen and customised and then operated according to rules devised by human intellectual effort of a specific purpose of creating these published literary works.

BELL J:   I think there is some issue as between you and the respondent concerning those rules, is there not?

MR YOUNG:   The rules are described, your Honour, by the trial judge at page 42 and following.  I think the only area ‑ ‑ ‑

GUMMOW J:   They are very detailed findings of fact, are there not?

MR YOUNG:   There are very detailed findings of fact.  None of the primary facts are in issue.  Her Honour did find that the rules were devised by individuals but it is not clear precisely who and when.  That is at pages 52 and 53.  It is clear that the computer program operated by reference to those rules.  For instance, Chief Justice Keane extracts the relevant passages of the trial judge’s findings about the way the rules guided the computer software at pages 135, last few lines, over the page at 136 in paragraph 2, the paragraph beneath the indented paragraph 4.  The rules also operate by reference to reference tables, as the Full Court explained at 138, around about line 12, and those reference tables are of course populated by people in the sense of making the entries and maintaining the reference tables.

GUMMOW J:   We do not know who they are though.

MR YOUNG:   No, we accept that, your Honour, but the point is that it is necessary to look at the literary work as a whole ‑ ‑ ‑

GUMMOW J:   Nor do we know how we are going to measure – we do not know whether they are qualified persons either, do we?

MR YOUNG:   No.  Well, I think the answer is on her Honour’s findings of fact that is unclear, your Honour.  They certainly included employees, but whether that ‑ ‑ ‑

GUMMOW J:   But it is not what the statute requires.

MR YOUNG:   No.  But, your Honour, the narrowing of the inquiry into origination and authorship is unwarranted by the statute.  It conflicts with the earlier decisions in IceTV and Desktop Marketing.  Desktop Marketing is very clear that you need to look at the intellectual human contribution to the compilation as a whole.  That is very clear in the judgment of Justice Lindgren at paragraph 160 subparagraphs 5 and 10, and also in the judgment of Justice Sackville in paragraph 409.

The court seemed to dismiss the concept of using a computer program as a tool.  That, of course, is the way in which the use of computer programs to arrange data have customarily been regarded in academic writings that have been referred to in the written submissions and by the Whitford Committee in the United Kingdom.  There is, of course, a special provision in the United Kingdom, but that is not required.  All that is required is a principled approach to the concept of ‑ ‑ ‑

GUMMOW J:   Your opponents say that there is some confusion on your side between computer assistance and computer generation.

MR YOUNG:   They do, your Honour.  That proposition is entirely circular because – can I go to the committee report, the copyright committee report that demonstrates that, your Honour.  It is in our folder of materials, tab 5.  The committee use that language of computer assisted versus computer generated.  It effectively begs the question, as is apparent by the recommendations of the committee at – I am afraid the pages are not numbered.  It is paragraph 13.18 in the extract from the committee report.  The definition for “computer-generated” that was recommended was it:

means that the material is generated by computer in circumstances such that there is no human author of the material.

That simply restates the requirement of section 32(2) that it be an original literary work.

BELL J:   Putting to one side the aptness or otherwise of the committee’s drafting endeavours, why is there no meaningful distinction between the notion of computer‑assisted work and computer‑generated work?  For my own part, there seems to be a somewhat self‑evident distinction.

MR YOUNG:   Your Honour, the labels do not help to draw that line, is my first point.  The second point is that the line is to be drawn according to whether the whole of the compilation in this case or the whole of the literary work in another case is to be regarded as one that has originated with human intellectual effort and so that is the question, but to answer that question you need to take account of selection and arrangement, yes, but as well, collection, formulation of the entries, the allocation of headings, the customising and control of the computer program, the devising of rules by which it should operate, all those matters come into the mix.  Yes, at the end of the day, having considered all those matters, one may decide that it is not an original literary work and you might label that computer‑generated, but the inquiry is the one that I have described.  That is the inquiry mandated by the Act, and that is not what the Full Court did.

GUMMOW J:   It requires at least some authorial contribution, I would have thought.

MR YOUNG:   It does, but the authorial contribution needs to be assessed across that wider spectrum, your Honour, in our submission.  That is what IceTV and Desktop Management required.  In this case, the Full Court has effectively departed from the traditional view about the way in which you assess origination and the way in which you regard the role of computers.  This issue has never been the subject of detailed consideration by an ultimate appellate court.  This is an appropriate vehicle because there are no disputed questions of fact.  All of the primary facts are unchallenged.  It is a question of what one makes of them.  The issue has real importance because it will decide the fate of all of those compilations that are commonplace in the modern world, including internet compilations such as car sale sites, real estate sites, job search sites, and so forth.

GUMMOW J:   I think your client really needs something like a database directive which you do not have at the moment.

MR YOUNG:   There is clearly none in Australia.  There is, as your Honour knows, elsewhere.

GUMMOW J:   Exactly.  It is a question then, your opponents say, why should you tweak the existing law to achieve the result which you should set about achieving by agitating the legislature.

MR YOUNG:   No, we say we are not tweaking the existing law.  We say the existing law has not been applied.  It has been departed from and this decision ‑ ‑ ‑

BELL J:   This, in part, is the argument that turns on the authority that Justice Lindgren referred to in Desktop Marketing, does it not?

MR YOUNG:   And the observations of the High Court in IceTV, because the High ‑ ‑ ‑

BELL J:   But turning to the former and your suggestion that the court has in some way narrowed 200 years of authority does tend to overlook its authority pre‑computers.

MR YOUNG:   It is true that there has not been a careful consideration of the matter in the computer age, your Honour, by an ultimate appellate court, but that is a reason, in our submission, why this point of principle should be taken by this Court.

GUMMOW J:   We will hear from Mr Golvan.

MR GOLVAN:   Your Honours, in paragraph 52 of the judgement in IceTV the judges said:

Rewarding skill and labour in respect of compilations without any real consideration of the productive effort directed to coming up with a particular form of expression of information can lead to error.

That is precisely the error that we respectfully submit our friends have contended for by placing little or no regard on the step of the authorship of the form of expression.  In our respectful submission, the case was really decided on facts applying the principles set out in IceTV and, in our view, there was no evidence of human authorship of the form of expression of the works as pleaded and your Honours can consider that the matter was decided on its particular facts.  We see no difficulty in distinction between computer generated and computer assisted, which we think is just a factual question, as is well illustrated by his Honour Justice Perram at paragraph 118 in his appeal judgment where his Honour illustrated the point, we think, most aptly in saying that:

But a computer program is a tool and it is natural to think that the author of a work generated by a computer program will ordinarily be the person in control of that program.  However, care must be taken to ensure that the efforts of that person can be seen as being directed to the reduction of a work into a material form.  Software comes in a variety of forms and the tasks –

et cetera, and his Honour then refers to the analogy of the plane piloted by the autopilot.  What has happened here is that the task of selection, arrangement and ordering of the data to create the works in the first time that they are actually reduced in material form occurs through a highly automated process.  Your Honours will appreciate from the judgment at trial that there were 76 different copyright works asserted by our learned friends at trial and that in a year Genesis, this vast database, produces 130 different directories.  It is a repository of a potential to produce a large number of copyright works.  The evidence indicated that Genesis actually contains something like tens of millions of entries which were entered through a whole diverse range of means, including, to a large extent, automated means as well as including data coming from third parties. 

Now, your Honours, we have placed weight on the way in which the copyright work has been defined as not including, for instance, copyright in the computer program or in individual lines of data.  Our friends have put their flag onto the mast, the mast of copyright in a compiled list and what the four judges below have considered is that on the facts there is no evidence of human contribution to the way in which those lists have been selected, ordered or arranged and we, of course, place weight on the fact that gathering itself is not enough and, as the court pointed out at paragraph 99 in IceTV, it is necessary, essential, to see that conjunction otherwise one is making a significant departure from the fundamental copyright principle as to the centrality of authorship in respect of this part of the Copyright Act.

Your Honours, Justice Perram continues to examine this analysis by looking in particular at the work done by Mr Vormwald and Mr Cooper.  They are the two people responsible for the book extract.  Your Honours, at paragraph 117, his Honour, there considering the role of these two gentlemen who came about as close as anyone in the case to having any connection with the form of expression of the work, said that their control did not involve:

shaping or guiding the material form of the directories.  They were not using the software, as perhaps a novelist uses a word processor –

or, I might interpolate, say, populating a field of data entry lines in an Excel program that a person would be familiar with using, but rather what has happened is that tens of millions of entries of data placed in Genesis and, I am reading now from 117 –

they were giving instructions at the very highest level about the principal parameters of the directories, namely –

This is their contribution to the form of expression according to his Honour –

the year and the location to which each related.  Neither gentleman conceived the material form of the directories; neither had the need, for the Book Extract routine was designed to relieve humans of that, no doubt, tedious task.  It is true that intellectual effort went into the operation of the software by these two gentlemen but that effort was not directed to the incarnation of the material form of the directories.

What the evidence showed, your Honours, is that they would implement the instructions to cause the book extract to occur and then they would go away and leave the computer to perform its function whether overnight or even over a weekend.  Now, as a consequence, one finds that in very carefully considered judgments, analysing extremely detailed and comprehensive facts in the case, one sees statements such as that expressed by the learned Chief Justice at paragraph 89 of his judgment that:

The compilation of the directories was overwhelmingly the work of the Genesis Computer System –

and that concept of overwhelming contribution is, we would say, essentially a finding of fact based on, we would say, a correct application of copyright principle.  Justice Perram referred at paragraph 104 of his judgment, which your Honours will find at page 168 of the application book, in the third sentence:

Whatever else might be said of the kind of efforts required of an author, they must be efforts which result in the material form of the work.

These are classic statements of copyright principle about the primacy of the author in this part of the Copyright Act.  Then at paragraph 116, in describing the work done by Cooper and Vormwald, Cooper in particular, at the top of page 174 of the application book, his Honour there said Cooper’s:

evidence lies at the epicentre of the question of the reduction of the directories into a material form –

and as a consequence his Honour set it out.  That is not to disregard the significance of gathering.  My friend’s argument necessarily comes to a striking halt when it comes to obvious tension elements of what the Copyright Act contemplates in relation to a reduction to material form and authorship.  Your Honours, at paragraph 167, Justice Yates, in his judgment ‑ ‑ ‑

GUMMOW J:   I am sorry, which paragraph?

MR GOLVAN:   Paragraph 167, your Honour.  That is at page 193.  Justice Yates said:

Contrary to the appellants’ submission, the Genesis Computer System was not a mere tool –

This is the computer‑generated computer system point that your Honour Justice Bell was speaking of –

utilised by the second appellant’s employees for this purpose.  To describe the functioning of the system in this way obscures the fact that the activities carried out by the Genesis Computer System in the “Book Extract” process were [his Honour found] transformative steps that were obviously fundamental to the making of the compilation in each case.

Then at paragraph 169, I think, your Honours ‑ ‑ ‑

GUMMOW J:   The last three sentences of 167 are quite important probably.

MR GOLVAN:   They are, your Honours, for reasons consistent with this argument.  Your Honours I think have been already taken to 169 where his Honour spoke, about halfway through the passage, of:

The contribution of the essentially computer-generated “Book Extract” process was of such overwhelming significance to the expression in material form of each compilation that none of the compilations can be properly characterised, overall, as a work that originates from an author or authors, even though elements of authorial contribution are present.

In the sense, my friend was advocating for, that is to say, there are elements of the Genesis, to use that term, of authorship in the gathering, but incomplete.  Copyright has never stopped at the stage of gathering information and that would be hopelessly impossible to enforce as a result in a case and, of course, not the result that the four judges below thought appropriate. 

Your Honours, can I just briefly then address on two other matters.  First, the question of Desktop Marketing.  Your Honour Justice Bell averted, with respect, we would say, correctly to the fact that the analysis of Justice Lindgren is set back in a time past unfortunately.  There are events that have transpired since that analysis which change the approach and lead

one to the conclusion about the need for a database protection, if there is to be such protection, as the Court in IceTV drew attention.  In addition, of course, the doubts about the judgment in Desktop Marketing were well and truly ventilated by the Justices in IceTV for reasons that are set out in that judgment and have been referred to in the Full Court and in the trial judgment.  Your Honours, finally, with respect to the White Pages point, my friend said that there was one additional fact he had, if I understand correctly, which involved a selection of headings.

BELL J:   I thought that was the Yellow Pages.

MR GOLVAN:   In the Yellow Pages, your Honour, and I am not averting to the Yellow Pages.  With respect to the book extract in the White Pages, that process was described at – if your Honours go to paragraph 151 of the trial judgment there is a neat summary of the book extract process and the White Pages which describe the way in which the computer would engage with the data in respect of four different types of work or jobs required, and her Honour at trial elaborated on this at paragraphs 252 to 259.  In the trial judgment at paragraph 309, her Honour dealt with the Yellow Pages version of the process and, essentially, likened it at 309, which is at page 103 of the application book, to the process in respect of the White Pages.  There was no effective differentiation.

The fact that there were headings adopted as part of what my friend described as a manual exercise was simply part of a data entry exercise.  The Genesis computer program would receive data which went, by the way, well beyond listing information, including contact information and other details which were not appropriate for listing.  Our friends, in their written submissions, refer to evidence of tags being placed in the data, but that does not take the case really anywhere in relation to the question of reduction to material form and it is our submission that the process described in relation to the Yellow Pages and the book extract is effectively no different to that which would apply in relation to the White Pages.  Furthermore, there was a claim in the original pleading to copyright in what was called the headings book and your Honours will be aware from the judgments below that that claim was dropped.  If your Honours please, they are the submissions for the respondent.

GUMMOW J:   Thank you.  Mr Young.

MR YOUNG:   Mr Golvan has submitted that there was no evidence of human contribution here.  Two of the judges in the Full Court disagreed.  They both found that there was, within the published literary works, human contribution.  Justice Perram specifically found that, as did Justice Yates.

GUMMOW J:   Where do we see Justice Yates?

MR YOUNG:   Justice Yates is in paragraph 169, three lines from the end of paragraph 169 at page 194, “even though elements of authorial contribution are present.”  Justice Perram went much further because he found that there was such elements that you could say the work was an original literary work by virtue of those other contributions.  He said that both in paragraphs 111 and 112 at 172.  The effect of paragraph 112 is that the collection phase and the activities in that phase were sufficient to show:

that the directories were original in the sense of not having been copied ‑

There is a prioritising of ‑ ‑ ‑

GUMMOW J:   I do not think paragraph 169 helps you.

MR YOUNG:   Well, there is a prioritising of contributions.

GUMMOW J:   You have got to get special leave.

MR YOUNG:   Yes.

GUMMOW J:   All right.

MR YOUNG:   Your Honours, all that the respondent has done is to repeat the Full Court’s approach that you look narrowly at the people who operated the computer program that did the selection and arrangement.  We agree, of course, that authorship is central and you need to look at the material form, but once you identify the material form, you do not confine your attention to the two individuals who operated the computer program that did that selection step.  You look at the whole of the work and you ask, what evidence is there of the contribution of authors to that work as a whole?  Two of the three judges has found that there were contributions.

They have said that there were more important contributions in that later step, but that is not to deny that the works are relevantly original in the sense that they are the product of human intellectual effort and not copied.  The whole error is reflected in our learned friend’s submissions to say that the epicentre is the person who pushes the button on the computer program that does the selection.  As to the dismissal of the computer as a tool, the basis of Justice Yates’ dismissal is apparent in paragraph 168 at 193 to 194.  His Honour accepts that the employees were involved “in selecting, customising, maintaining and operating”, but he says that that is not to the point.

GUMMOW J:   What do you say about paragraph 89 of Chief Justice Keane?

MR YOUNG:   Paragraph 89, your Honour?

GUMMOW J:   Yes, page 162, and, indeed, paragraph 90.

MR YOUNG:   We say, your Honour, that his Honour is factually correct to say that the selection and data arrangement occurred at the book extract stage with a qualification about the Yellow Pages headings which her Honour made in her findings of fact at paragraph 198, but those headings were determined at the earlier stage.  But as for the conclusion that the compilations do not originate from an individual or group of individuals, you can only reach that conclusion by focusing solely on one step in the preparation of the literary work.  Desktop Marketing did go on and consider the contribution factually in that case of computer programs, so it is not a dinosaur to the extent that Mr Golvan described it.

GUMMOW J:   I do not think it is in good health though.

MR YOUNG:   It obviously does not deal with the area that we are dealing with, your Honour, but that is not to say that there is anything wrong in the view that the earlier selection processes remain a relevant subject matter for analysis as to whether they are a relevant contribution to originality.  That has not been doubted and was not doubted in IceTV.  We submit that it does raise questions of general importance and in a suitable vehicle.

GUMMOW J:   Thank you.  The applicants do not challenge the detailed primary findings of fact made by the trial judge.  We see no error in the application by the Full Court of the law to those facts.  Accordingly, special leave is refused with costs.

AT 12.03 PM THE MATTER WAS CONCLUDED