Top Plus Pty Ltd v Yi Star Pty Ltd
[2023] FedCFamC2G 189
•23 March 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Top Plus Pty Ltd v Yi Star Pty Ltd [2023] FedCFamC2G 189
File number(s): BRG 1005 of 2019 Judgment of: JUDGE BAIRD Date of judgment: 23 March 2023 Catchwords: COPYRIGHT – Infringement of copyright in protected cinematograph films being karaoke music videos (KMV Films) – where played in karaoke venue operated by respondents without licence from the applicants – proceeding brought by copyright owner and exclusive licensee – subsistence, ownership, and exclusive licence of KMV Films put in issue – subsistence of copyright established – second applicant’s ownership of copyright established – first applicant’s exclusive rights established – first and third respondents admit limited acts of use of 10 of the KMV Films – infringement of copyright in 10 KMV Films established – authorisation of first and third respondents established – proceeding not limited to 10 examples – defence of innocent infringement under s 115(3) of the Copyright Act 1968 (Cth) not made out – declaration of infringement – permanent injunction – damages under s 115(2) of the Copyright Act – additional damages under s 115(4) of the Copyright Act Legislation: Copyright (International Protection) Regulations 1969 (Cth) reg 4
Copyright Act 1968 (Cth) ss 10, 36, 90, 93, 98, 101, 115, 116, 131
Evidence Act 1995 (Cth) ss136, 141
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 r 15.02
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 141, 190, 191, 211
Federal Circuit Court of Australia Act 1999 (Cth) s76
Federal Circuit Court Rules 2001 (Cth) r 15.03
Cases cited: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) (2007) 157 FCR 564; [2007] FCAFC 40
Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd (2016) 329 ALR 22; (2016) 121 IPR 150; [2016] FCAFC 22
Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia (2016) 248 FCR 280; (2016) 337 ALR 558
Australasian Performing Right Association Ltd v Commonwealth Bank of Australia (1992) 40 FCR 59
Australasian Performing Rights Association v Escape Bar & Night Club [2017] FCCA 2690
Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) (2011) 195 FCR 1; [2011] FCA 352
Autodesk Pty Ltd v Cheung (1990) 17 IPR 69
Bailey v Namol Pty Ltd (1994) 53 FCR 102; (1994) 30 IPR 147; [1994] FCA 140
Brambles Ltd v Wail (2002) 5 VR 169; [2002] VSCA 150
Campaigntrack Pty Ltd v Real Estate Tool Box Pty Ltd [2022] FCAFC 112
Chong v Ha (No. 2) [2018] FCCA 320
Dallas Buyers Club LLC v iiNet Ltd (No 4) (2015) 327 ALR 670; (2015) 112 IPR 1; [2015] FCA 317
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd [1976] 2 All ER 173; (1976) RPC 197
Halal Certification Authority Pty Ltd v Scadilone Pty Ltd (2014) 107 IPR 23; [2014] FCA 614
Henley Arch Pty Ltd v Lucky Homes Pty Ltd (2016) 120 IPR 317; [2016] FCA 1217
Interfirm Comparison (Aust) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445
IPC Global v Pavetest (No 2) (2016) 121 IPR 434; [2016] FCA 1332
JR Consulting & Drafting Pty Ltd v Cummings (2016) 116 IPR 440; [2016] FCAFC 20
Kingston v Australian Capital Territory [2011] ACTSC 165
Lundbeck A/S v Sandoz Pty Ltd (2022) 399 ALR 184; (2022) 165 IPR 411; [2022] HCA 4
Matson v Attorney‑General (Cth) [2021] FCA 161
Mergenthaler Linotype Co v Intertype Ltd (1926) 43 RPC 381
Microsoft Corporation v CPL Notting Hill Pty Ltd (No 7) [2022] FedFamC2G 590
Microsoft Corporation v CPL Notting Hill Pty Ltd (No 8) [2022] FedCFamC2G 1033
Murray v Figge (1974) 4 ALR 612
Phonographic Performance Company of Australia Ltd & Ors v Hairy Little Sista Pty Ltd & Anor [2018] FCCA 2794
Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514; [2019] HCA 13
Roadshow Films Pty Ltd v iiNet Ltd (2012) 248 CLR 42; [2012] HCA 16
Sandoz Pty Ltd v Lundbeck A/S (2020) 384 ALR 35; (2020) 153 IPR 380; [2020] FCAFC 133
Sealed Air Australia Pty Ltd v Aus‑lid Enterprises Pty Ltd (2020) 375 ALR 324; [2020] FCA 29
Streetworx Pty Ltd v Aircraft Urban Group (2015) 110 IPR 544; [2015] FCA 140
Tamawood Ltd v Habitare Developments Pty Ltd (2015) 112 IPR 439; [2015] FCAFC 65
Telstra v Australasian Performing Right Association (1997) 191 CLR 140; [1997] HCA 41
The Environment Centre NT Inc v Minister for Resources and Water (No 2) (2021) 399 ALR 68; [2021] FCA 1635
Top Plus Pty Ltd & Ors v K Square Pty Ltd & Ors (No. 2) [2010] FMCA 67
TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) (2007) 158 FCR 444; (2007) 239 ALR 117; [2007] FCA 151
Universal Music Publishing Pty Ltd v Palmer (No 2) (2021) 158 IPR 421; [2021] FCA 434
Viva Olives Pty Ltd v Origin Olives Australasia Pty Ltd [2012] FCA 545
Winnebago Industries v Knott Investments Pty Ltd (No 4) (2015) 241 FCR 271; [2015] FCA 1327
Division: Division 2 General Federal Law Number of paragraphs: 402 Date of last submission/s: 1 June 2021; additional documents submitted 9 December 2021; further submissions 10 March 2023 Dates of hearing: 19‑22 April and 5 May 2021 Place: Sydney Counsel for the Applicants: G.S. Tsang Solicitor for the Applicants: Thomson Geer Counsel for the Respondents: E Robinson and A Choy Solicitor for the Respondents: AGC Lawyers ORDERS
BRG 1005 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: TOP PLUS PTY LTD ACN 115 594 477
First Applicant
UNIVERSAL MUSIC LIMITED
Second Applicant
AND: YI STAR PTY LTD ACN 608 447 061
First Respondent
ZHANG WIEN
Second Respondent
CUI ZHOYI
Third Respondent
WENYAN WANG
Fourth Respondent
ORDER MADE BY:
JUDGE BAIRD
DATE OF ORDER:
23 MARCH 2023
THE COURT:
1.GRANTS leave to the respondents to reopen their case for the limited purpose of reading paragraphs [1]‑[4] of the affidavit of Mr Quanta Tian affirmed 13 January 2021, and paragraphs [1]‑[5] of the affidavit of Mr Tian affirmed 15 March 2021.
2.DECLARES that the first and third respondents have each infringed the second applicant’s copyright in the cinematograph films set out in Annexure A.
3.ORDERS that each of the first and third respondents, whether by themselves, their servants, agents or otherwise, be permanently restrained from making copies of, communicating to the public, or causing or authorising to be seen or heard in public, any karaoke music video identified in DW‑5 of the affidavit of Mr Duncan Wong affirmed 4 November 2020 (KMV Films) without the licence of the first applicant or the second applicant.
4.ORDERS destruction upon oath of all copies of any KMV Films and permanent deletion of all digital and electronic copies in the possession, power, custody or control of the first and third respondents (or either of them) within 28 days after service upon them of this Order, and GRANTS liberty to the respondents to apply to vary the time for completion, or to seek other orders to ensure that the KMV Films are removed from and are not on, or able to be accessed and used via, the video‑on‑demand karaoke system made available at the first respondent’s premises.
5.ORDERS pursuant to s 115(2) of the Copyright Act 1968 (Cth), that the first and third respondents jointly and severally pay to the first applicant damages in the sum of $113,538.34 (incl. GST).
6.ORDERS pursuant to s 115(4) of the Copyright Act that the first and third respondents jointly and severally pay to the first applicant s 115(4) damages in the sum of $60,000.00.
7.STANDS OVER the proceeding to a date to be fixed after consultation with the parties, for the making of orders for interest and any other orders, if agreed, and otherwise to set a timetable for submissions and arguments on costs, and interest if agreement is not reached.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BAIRD
INTRODUCTION
This proceeding concerns claims of infringement of copyright in certain cinematograph films, being karaoke music videos (KMVs). The applicants seek orders pursuant to ss 115 and 116 of the Copyright Act 1968 (Cth) against the respondents in relation to infringements of copyright in certain KMVs comprised in a catalogue the applicants say at all material times was owned by the second applicant, Universal Music Limited, a Hong Kong company, and exclusively licensed for the territory of Australia and New Zealand to the first applicant, Top Plus Pty Ltd, including, relevantly, for the period 1 January 2017 to 31 December 2020. The catalogue of KMVs in issue comprise some 6,214 Chinese (both Mandarin and Cantonese) and English KMVs, and new releases of KMVs added from time to time, owned and controlled by Universal Music, released in Hong Kong and Australia, and/or supplied commercially in Australia in VCD/DVD format or electronic form (collectively, KMV Films; which I also refer to as the UML catalogue[1]).
[1]In the pleadings, Claim (defined later in these reasons at [31]), the applicants plead “a catalogue of 6,214 KMVs together with any additions made thereto by way of the release of new KMVs, and defined as ‘the UML Works’”, however, as cinematograph films are not works, but are subject matter other than works, I use the phrase KMV Films and UML catalogue.
The first respondent, Yi Star Pty Ltd, was incorporated on 25 September 2015. Since about June-August 2017, inter alia, it has operated a karaoke venue and provided karaoke facilities under the registered business name ‘E-Star Karaoke’ at premises on the Gold Coast in Southport, Queensland (the Premises). Patrons of E-Star Karaoke are able to access, play and sing along to KMVs using the video-on-demand (VOD) karaoke system provided by Yi Star in rooms at the Premises. This VOD karaoke system is referred to in the evidence as the Thunderstone system.
Each of the second to fourth respondents are members of the same family (respectively, daughter‑in‑law, Ms Yiwen Zhang, son, Mr Zhuoyi Cui and mother, Ms Wenyan Wang), at various times were or are directors of Yi Star, and in the case of the third and fourth respondents, also the shareholders in Yi Star.
The applicants allege that between August 2017 and October 2019 (Infringement Period) Yi Star provided and offered to provide the KMV Films to its customers to copy, communicate and perform in public at the Premises without a licence from the applicants, thereby infringing copyright and Top Plus’ rights as exclusive licensee, including the right to collect the associated licence fees.
It is not in dispute that Yi Star has never held a copyright licence issued by either of the applicants.
The applicants say that in addition to Yi Star’s infringement of copyright, each of the individual respondents is liable for copyright infringement because they authorised Yi Star’s conduct by failing to prevent, or take reasonable steps to prevent, or were relevantly indifferent to, Yi Star’s conduct.
The applicants seek declarations, injunctive relief, orders for delivery up and/or deletion of the KMV Films, and Top Plus seeks damages pursuant to ss 115(2) and (4), and s 116(1A) Copyright Act. The relief sought under the Copyright Act is in the form attached to the applicants’ written closing submissions (proposed final orders). The applicants also seek interest and their costs.
The applicants seek final injunctive relief in respect of all the KMV Films (as I have said above, in the pleadings being “the catalogue of 6,214 KMVs together with any additions made thereto by way of release of new KMVs (the UML works)”), and more particularly as evidenced and identified in the applicants’ proposed final orders, being those 6,214 KMV Films identified in the Spreadsheet extracted from Universal Music’s electronic database of KMV Films on or about 6 August 2020.
For the purpose of establishing infringement in the proceeding, however, the applicants rely specifically, and by way of example only, on evidence relating to instances of infringement of 10 identified KMV Films and corresponding 10 copy KMVs (collectively, the Infringement Examples) as summarised in Table 1 of Annexure A to these reasons[2]. In Table 1 I identify (as the ‘original’ KMV Films, which the applicants additionally referred to as the ‘sample’ KMV Films) the 10 KMV Films the cinematograph copyright in each of which I am satisfied on the evidence is owned by Universal Music, and the 10 KMVs that were seen, heard and communicated to the public at E‑Star Karaoke on the dates specified by the applicants’ witness Mr Ho Yin Wong, the Footage relating to which is in evidence, see reasons at [103].
[2]The evidence was filed on the basis there were 10 Infringement Examples, however, it was discovered the week before the hearing that the tenth original KMV Film was mislabelled in the evidence. This was corrected during the hearing. The applicants press the 10 Infringement Examples
The respondents deny copyright subsistence and Universal Music’s ownership of the KMV Films, Top Plus’ exclusive licence, and all liability for infringement, pecuniary and other relief. They also dispute Top Plus’ claims as to the quantum of compensatory damages, and to additional damages.
The respondents contend that the applicants’ case cannot succeed. They submit the exclusive licence agreements relied upon by the applicants are void because Universal Music’s ‘purported’ consideration was illusory, that the contracting parties did not take the necessary steps to give effect to the agreements, and the evidence does not establish that Universal Music granted any licence (exclusive or otherwise) to Top Plus in relation to the KMV Films. They say further, and alternatively, that notwithstanding the pleadings, prior to the hearing the applicants have limited their case to the Infringement Examples, not any broader claim for relief in relation to the KMV Films (namely, injunctive and pecuniary relief and orders for deletion or delivery up of all of the KMV Films – colloquially described as ‘catalogue orders’).
In relation to the Infringement Examples, by not disputing certain facts in the applicants’ second Notice to Admit Facts[3], and by the Parties’ Consolidated Statement of Facts and Issues in the Proceeding[4] the respondents do not dispute that without the licence of the applicants, Yi Star caused to be seen and heard in public, and communicated to the public copies of the whole or a substantial part of the 10 KMV Films, and that it made copies of the whole or a substantial part of the 10 KMV Films variously on 23 December 2017, 19 December 2018 and 19 December 2019 (defined below in these reasons as the Infringement Dates). The respondents did not concede that any of the 10 KMV Films was used more than once. As I have said above at [9], these copies and the sample 10 KMV Films are collectively the Infringement Examples.
[3] Second Notice to Admit Facts dated 4 December 2020, and Notice of Dispute dated 7 January 2021
[4] Filed 22 March 2021
The respondents deny that the second to fourth respondents authorised Yi Star’s conduct. In closing submissions, however, they accepted that Yi Star and the third respondent, Mr Cui, authorised the acts said to have infringed copyright (but maintain that the applicants’ case must fail on the anterior issues of ownership and licence). They maintain that the other two individual respondents did not authorise the conduct.
If infringement is established in respect of any of the KMV Films (that is, whether the Infringement Examples, or more broadly, the UML catalogue), the respondents contend that they have made out a defence of innocent infringement under ss 115(3) and 116(2) of the Copyright Act. They submit that Yi Star proceeded on a reasonable belief that it had obtained the necessary copyright licences for all the KMVs Yi Star made available to its customers on its Thunderstone system in the karaoke rooms at the Premises, including for the Infringement Examples.
The respondents submit that representations that Yi Star was relevantly licensed were made to it by a Chinese third party provider of karaoke systems, Beijing Thunderstone Technology Ltd, by a sales agent located in China, Mr Yang Zhao, from whom Yi Star obtained its karaoke system (viz., the Thunderstone system, which the respondents’ oral evidence disclosed was a system built from a number of third party manufacturers/suppliers components not limited to Thunderstone). The respondents in defence rely on oral representations made by Mr Zhao to Mr Cui when the latter was arranging the acquisition of the Thunderstone system, and to a 2017 written agreement (written in Chinese), entered into between Yi Star and Mr Zhao, who in the document is described as Thunderstone’s agent, an English translation of which document is in evidence (Yi Star 2017 Agreement).
Notwithstanding the above, in closing submissions the respondents do not oppose the form of declaration proposed by the applicants (which declaration is limited to the Infringement Examples), if limited to Yi Star and Mr Cui, nor do they oppose an injunction being ordered (I assume that these concessions are proffered provided that Top Plus establishes it is the exclusive licensee of the KMV Films). The respondents also contend that there are practical difficulties with giving effect to orders for deletion of relevant material.
THE PARTIES
The applicants
Universal Music, the second applicant, is a company incorporated under the laws of Hong Kong and based in Hong Kong. Universal Music is engaged in the business of creating and commissioning KMVs and, relevantly, licensing the copying, communication and public performance of the KMV Films, including in Hong Kong and Australia.
I expand upon Universal Music’s business and the KMV Films below. It suffices here to state that on the evidence I am satisfied that the details of the KMV Films owned and/or controlled by Universal Music are recorded in an electronic database kept and maintained by the company which is updated each time a new KMV Film is made and acquired, and from which complete lists of the KMV Films then owned and/or controlled can be extracted, and that the evidence at hearing includes the Spreadsheet of the KMV Films – comprising 6,214 KMVs as at on or about 6 August 2020 when it was generated by extraction from the electronic database.
Universal Music has expanded its business and its repertoire of the KMV Films over time through, among other activities, mergers and acquisitions of other entities, businesses and their record labels. Following these activities, Universal Music has become the parent company of a group of record labels (which description the evidence establishes includes the Hong Kong incorporated companies EMI Records Limited, Cinepoly Records Company Limited, and Go East Entertainment Company Limited and eponymous record labels and trade marks).
Universal Music uses the name ‘Universal Music Hong Kong’ to differentiate itself from other companies within the Universal group of companies. Previously, and until 23 April 1999, Universal Music operated under the name ‘Polygram Records Limited’. Universal Music uses the following logos:
(each of which logo I refer to as a UML Logo).
Top Plus, the first applicant, was incorporated in 2005. It conducts the business of licensing the copying, communication and public performance of KMVs by karaoke outlets (also referred to as karaoke venues) including in Australia. These are commercial venues dedicated to providing karaoke singing services to the public, often in the form of karaoke bars or karaoke restaurants. Top Plus sublicenses those venues its rights in KMVs non‑exclusively, including relevantly the KMV Films, in exchange for payment in advance of an annual licence fee calculated on a fee per room, or on a fee per day basis. That is, relevantly, it licenses the catalogue of the KMV Films; it does not grant a licence on a per‑KMV Film made available or played basis, and correspondingly, a licensee has no obligation to report the KMV Films played by its patrons.
The respondents
Yi Star (the first respondent)
Yi Star is the proprietor of two businesses that are located at a dual frontage property with frontage at 80 Scarborough Street and extending through to frontage on Davison Lane in Southport, Queensland: a karaoke venue called ‘E-Star Karaoke’ (identified above as the Premises) and a restaurant called ‘Season Buffet’ serving Asian BBQ and hotpot cuisine (the Restaurant) (together, Yi Star’s businesses). As I have adverted to above, Yi Star launched E-Star Karaoke in mid‑2017, commencing with a soft launch in June 2017, and formally launching in August 2017. It appears that Yi Star commenced operating the Restaurant sometime earlier, according to the second respondent, Ms Zhang, the Restaurant’s manager, at least since November 2016. There is no suggestion that there has been any alleged infringing conduct at or by the Restaurant.
The main public entrance to the Restaurant is 80 Scarborough Street, Southport, and the main public entrance to E-Star Karaoke is in Davison Lane behind the Restaurant.
Mailing address
The Australian Securities and Investment Commission’s (ASIC) records for Yi Star disclose that its principal place of business is 80 Scarborough St, whilst its registered office is its accountants’ address. The contact address for the purposes of ASIC communications is the Post Office Box of Yi Star’s accountants. ASIC’s Business Name Details record that the registered business name ‘E-Star Karaoke’ is held by Yi Star, the principal place of business of E-Star Karaoke is 80 Scarborough St, and the address for service of documents is the accountants’ PO Box address. It follows that the principal place of business and registered office addresses for each of the Yi Star businesses are the same.
The evidence of the respondents’ witnesses is also that the mailing address for the Yi Star’s businesses is 80 Scarborough Street, or alternatively, the postal address of Yi Star’s accountants. There is no postal address for E-Star Karaoke other than that of the Restaurant. The mailing address for E-Star Karaoke is relevant to the issue of receipt of written notifications from Top Plus of its rights, its invitations to obtain a licence for use of the KMV Films, and its demands for payment of unpaid licence fees.
Number of karaoke rooms at the Premises
The number of karaoke rooms at the Premises set up with the relevant Thunderstone system (which played Chinese and English KMVs, and which the evidence establishes also played Korean KMVs) at particular points in time in the Infringement Period is the subject of dispute, and of differing evidence from certain of the respondents’ witnesses.
In sum, the floor plans of the development approval for the Yi Star businesses identifies approval for the karaoke venue of 21 private rooms and a lounge, as well as storage areas and a reception area, in addition to the restaurant areas; Yi Star’s advertisements on Facebook (all of which were in Chinese or English) promoted E-Star Karaoke as having 21 private rooms available for hire at the Premises, and the Thunderstone system allowed for access points in up to 22 rooms. The evidence of the number of available rooms is relevant to the question of pecuniary relief.
Ms Zhang (the second respondent)
Ms Zhang (also known as Julie Zhang), the second respondent, was a director of Yi Star and its company secretary from 17 November 2017 to 31 January 2019. Ms Zhang is the wife of the third respondent, Mr Cui. Ms Zhang managed the Restaurant. From the end of 2017, a second person was hired for the role, who then reported to Ms Zhang. In about 31 January 2019, Ms Zhang started another company, Heeretea Shop Pty Ltd, also located at 80 Scarborough St, which provided food to order for E-Star Karaoke’s customers. E‑Star Karaoke received customers’ payments for the orders, and on-paid Heeretea on a monthly basis.
Mr Cui (the third respondent)
Mr Cui (also known as Kenny Cui), the third respondent, is the sole director of Yi Star, company secretary and sole shareholder, and has been so since 31 January 2019. Mr Cui has been a director of Yi Star since 23 January 2018. Mr Cui is the husband of Ms Zhang, and the son of the fourth respondent, Ms Wang. He states that he came up with the idea of running karaoke business on the Gold Coast in 2015, and asked his mother for assistance. Mr Cui is principally responsible for the business of E-Star Karaoke, and has been the only person in charge of E-Star Karaoke since it started trial operation in June 2017.
Ms Wang (the fourth respondent)
Ms Wang (also known as Wendy Wang), the fourth respondent, procured Yi Star’s incorporation and was its founding and sole director and company secretary from 25 September 2015 to 17 November 2017, when she resigned both roles. Until 4 February 2019, she was Yi Star’s sole shareholder. Ms Wang is the mother of Mr Cui, and the mother‑in‑law of Ms Zhang. Ms Wang financed Yi Star in setting up the Yi Star Businesses through a company she controlled, EEY Investment Pty Ltd. Mr Cui’s oral evidence established that Ms Wang lent more than AUD$1 million, none of which was repaid as at the date of hearing.
THE PROCEEDING
The applicants commenced the proceeding on 21 November 2019 by originating application and statement of claim both dated 19 November 2019. The applicants rely on their Second Amended Application and Second Amended Statement of Claim each dated and filed 10 June 2020, amended pursuant to orders made by me on 2 June 2020. The respondents rely on their Amended Defence filed 7 July 2020.
The applicants have served 2 Notices to Admit Facts, to which the respondents have responded. I discuss these later in these reasons (below at [141]‑[142]).
Shortly before hearing the parties provided to the Court a Consolidated Statement of Facts and Issues in the Proceeding, and an extremely short form chronology (this latter document identifies the respondents’ disagreements). I have had regard to these documents.
THE HEARING
The hearing took place before me from 19 April 2021 to 22 April 2021, and continued on 5 May 2021 to conclusion of the evidence. I conducted the hearing in the Court in Sydney in person and remotely via Microsoft Teams. Counsel for the applicants appeared in person, whilst counsel for the respondents appeared via Microsoft Teams from Brisbane. All witnesses who were cross‑examined appeared remotely via Microsoft Teams variously from Queensland and China.
Following the conclusion of the hearing, the parties filed and provided to Chambers written closing submissions, by the applicants dated 12 May 2021, by the respondents in answer dated 25 May 2021, and by the applicants in reply dated 1 June 2021. On 30 June 2021, in lieu of oral closings the parties sought, and I made, orders by consent that unless I advised otherwise the parties’ ‘comprehensive closing submissions’ be considered on the papers, pursuant to r 15.03 of the Federal Circuit Court Rules 2001 (Cth) (as it then was, now r 15.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (GFL Rules)). Further to my request made during the hearing, in December 2021, the parties jointly submitted to Chambers annotated versions of the affidavits read at hearing, annotated with the evidentiary rulings made.
35A. In February 2023, shortly before I proposed to deliver these reasons, I informed the parties that although reference to the affidavits of two deponents of the respondents I identify below (see at [45]) had been made by both parties in their closing submissions, at hearing the respondents did not read or tender those affidavits, and that I did not propose to take into account that material. After some delay (the reasons for which I accept), on 6 March 2023, the respondents’ solicitor sought a mention of the proceeding in order to address the Court on the issue whether the Court should have regard to the affidavits of Mr Quanta Tian, an accountant employed by the respondents’ external accountant firm. Further to correspondence from both parties, on 7 March 2023, I made orders allowing the parties to make short written submissions on the issue, and that the issue be determined on the papers as part of these reasons. On 10 March 2023 the respondents provided their submissions to the Court, together with an affidavit of their solicitor in support, and the applicants provided their submissions in reply. See further, below at [45] – [45L].
Respondents’ contention that the applicants’ case is limited to 10 KMV Films
The respondents submit that the applicants are not entitled to seek findings in relation to any infringements other than those single instances admitted in the Infringement Examples. They submit (closing submissions at [48]) that whilst ‘it may be accepted that the [Claim] was broad enough to cover breaches of copyright in any of the 6,214 [KMV Films] ... the matter does not end with the pleading’. They say that ‘the applicants have chosen to restrict their pleading of infringement and it is impossible for the applicants to hark back to the pleadings and treat them as governing the area of contest’. They say that by the following, the applicants have restricted their pleaded claim to the Infringement Examples:
(a)the respondents’ request for particulars made 19 December 2019 seeking particulars of the KMV Films, Universal Music’s ownership, and allegations of infringements, and applicants’ response filed 28 July 2020 (which they say was non‑responsive);
(b)the respondents’ application in a case filed 3 November 2020 seeking the particulars;
(c)Top Plus’ investigator Mr Ho Yin Wong’s affidavit evidence filed 5 November 2020 of infringement of the Infringement Examples; and
(d)the transcript of the directions hearing before me on 11 November 2020 (on which the respondents place great emphasis).
For the following reasons, I reject the respondents’ submission. In none of the above mentioned materials and events have the applicants confined their Claim or the scope of the relief they seek to the Infringement Examples. The transcript of the directions hearing conducted by telephone on 11 November 2020 (mischaracterised by the respondents as the hearing of their application in a case), makes clear to the contrary. On that occasion Mr Tsang, counsel for the applicants and I had the following initial exchange (emphasis added):
HER HONOUR: Thank you. Now, I see there has been quite a lot of material filed recently, and I have warring applications and the like. Everyone gets so optimistic at this time of year. Mr Tsang, can I hear from you, please.
MR TSANG: Yes, your Honour. Where the proceeding is at currently is that the applicant has filed and served its evidence in chief. That occurred last week, and it’s no more than four affidavits. And I just note, at this stage, that the case that the applicants seek to make on their evidence is confined. It is limited, on the infringement evidence, to 10 sample karaoke music videos. Out of the over 6000 that are in our catalogue, we seek to prove infringements by reference to 10 examples. As far as we’re concerned, the next step for the orderly conduct of the proceeding, or preparation for it for the hearing, is for the respondents to put on their evidence in answer.
…
The Court and both counsel (Mr Choy for the respondents) returned to the matter a short time later during the direction hearing (emphasis added):
HER HONOUR: Given the evidence that has now been put forward, have you - - -
MR CHOY: I seek to address your Honour on the evidence that has been filed.
HER HONOUR: No, because I haven’t read it. What I want you to ..... - - -
MR CHOY: Well - - -
HER HONOUR: - - - is whether the particulars need to be recast, given the evidence that is now relied on in Mr Tsang’s case that there’s more limited claims in relation to – well, I think, as I understand Mr Tsang, the applicants exemplify the copyright, and they’re going to probably claim infringement claims in relation to a more limited number of works.
MR CHOY: Your Honour, that’s as I also understand the position. And could I just add that today is the first time the respondents have been notified that the applicant seeks only to confine its case to infringement of 10 songs. That is inconsistent with the pleadings, which have been amended twice, and that has been inconsistent with all the correspondence provided to us today [sic, to date]. I am learning of this for the first time as is your Honour today.
HER HONOUR: Okay.
MR TSANG: Your Honour, what I said is we seek to pursue the infringement - - -
HER HONOUR: What I’m not clear is whether what is being said by Mr Tsang is that they’re – as it quite – is not unusual in music and film infringements [proceedings] is that the infringements are exemplified by a limited number of subject matter, and then the applicants seek a catalogue order. I’m not clear on that matter, and I would be perhaps jumping the gun to understand Mr Tsang as saying that his client is now seeking to establish copyright ownership infringement and damages by reference to 10 instances only.
MR TSANG: Your Honour, the confinement of our case relates to proof of infringement. The applicants rely on their entire catalogue. They seek to persuade your Honour that the licence fees that should have been paid for the right to use the entire catalogue were triggered, you know, by even one of these infringements in the relevant years. It’s a package deal, your Honour - - -
HER HONOUR: Yes.
MR TSANG: - - - if I can put it that way. So we rely on the entire catalogue for ownership and assistance [sic, subsistence]. We rely on it for infringement, but we seek to prove the infringement by reference to only 10 case[s].
The respondents’ application in a case for particulars was stood over and subsequently dismissed by consent.
I am satisfied that on the pleaded case – in the Claim and in the Application, in the response to particulars, in the exchanges between counsel and the Court in the directions hearing on 11 November 2020, in their evidence at hearing, in the applicants’ opening submissions, and in their written closing submissions, and in the proposed final orders, the applicants at all times have claimed and propounded the case that Universal Music owns and/or controls and licenses the KMV Films, which comprise at least the 6,214 KMV Films identified in the Spreadsheet, and that Top Plus is exclusively licensed to use the KMV Films in Australia and New Zealand, that the respondents have infringed the applicants’ rights in the KMV Films as exemplified in the 10 Infringement Examples, and that they seek relief in the nature of catalogue orders including final injunctive relief, compensatory damages and additional damages in respect of the KMV Films and delivery up or deletion of all copies of all KMV Films, whilst limiting the final declaratory relief they seek to declarations of infringement of 10 of those KMV Films, on 3 identified dates (one date in each of 2017, 2018, and 2019).
I am further satisfied that the 10 KMV Films – also referred to as ‘Sample KMVs’ in paragraph [1] of the applicants proposed final orders, and in their opening and closing submissions – at all times were and are relied on as examples only of the KMVs that comprise the KMV Films in which the applicants say copyright has been infringed by the respondents (to make abundantly clear I am here meaning the KMV Films /the UML catalogue / and the 6,214 KMVs identified in the Spreadsheet – all being ways of describing the same subject matter other than works). The applicants have not ‘restricted’ their case. At no time prior to or at hearing was or is the applicants’ case limited to the 10 Infringement Examples (10 ‘original’ KMV Films and corresponding claimed infringing copies of those KMVs).
The witnesses and evidence at hearing
The applicants’ witnesses
At hearing the applicants relied on the evidence of 5 witnesses, each of whom was cross‑examined:
(a)Mr Christopher Chan, the managing director of Top Plus, and a director of the company, who is based in Queensland. Mr Chan affirmed 4 affidavits read at hearing: affidavits affirmed 7 October 2020 (Chan 1), 24 February 2021 (Chan 2), 12 April 2021 (Chan 3), and 14 April 2021 (Chan 4);
(b)Mr Kim To Wong (also known as Duncan Wong), the managing director of Universal Music, who is based in Hong Kong. Mr Duncan Wong affirmed one affidavit read at hearing: affidavit affirmed 4 November 2020;
(c)Ms Tong Lai Ming (also known as Juno Tong), the financial director of Universal Music, who is based in Hong Kong. Ms Tong affirmed 2 affidavits read at hearing: affidavit affirmed 4 November 2020 (Tong 1), and affidavit filed 15 March 2021 (identified in the hearing as affirmed 11 March 2021) (Tong 2);
(d)Mr Louis Lam, marketing director of Top Plus from December 2018 until 2020, when he phased out of the role due to the Covid‑19 pandemic. Since 11 November 2019, Mr Lam has also been a director of the company. He is based in Queensland. Mr Lam affirmed 2 affidavits read at hearing: affidavits affirmed 25 February 2021 (Lam 1), and 12 April 2021 (Lam 2). Mr Lam was cross‑examined with the assistance of an interpreter; and
(e)Mr Ho Yin Wong, a graduate student based in Queensland, who since 2017 has undertaken investigative work for Top Plus regarding the use of the KMV Films in karaoke venues in Queensland. Mr Wong affirmed 2 affidavits read at hearing: affidavits affirmed 7 October 2020 (Wong 1), and 12 April 2021 (Wong 2).
Certain of the evidence of each of the applicants’ witnesses was read subject to a limitation as to their understanding pursuant to s 136 Evidence Act 1995 (Cth). Their evidence so limited was primarily in relation to their understanding that Top Plus’ rights in the KMV Films under written agreements with Universal Music were exclusive, and as to the import of certain documents relating to those rights.
The respondents’ witnesses
At the hearing the respondents called 6 witnesses, each of whom was cross‑examined:
The individual respondents and an employee – each of whom is based in Queensland
(a)Ms Zhang, who swore 2 affidavits read at hearing: affidavits sworn 12 January 2021 (Zhang 1), and 14 March 2021 (Zhang 2);
(b)Mr Cui, who affirmed 3 affidavits read at hearing: affidavits affirmed 12 January 2021 (Cui 1), 14 March 2021 (Cui 2), and 6 April 2021 (Cui 3). Cui 2 incorporated, modified and supplemented Cui 1;
(c)Ms Wang, who affirmed 2 affidavits read at hearing: affidavits affirmed 12 January 2021, in English (Wang 1), and 29 March 2021, in Mandarin (Wang 2)[5];
(d)Mr Xu Zhao (also known as Joseph Zhao), an employee of Yi Star based in Queensland. Mr Xu Zhao was assistant manager of Yi Star from 2017 before becoming a manager of E-Star Karaoke in early 2018. Mr Xu Zhao affirmed 3 affidavits read at hearing: affidavits affirmed 13 January 2021 (Xu Zhao 1), 13 March 2021 (Xu Zhao 2), and 6 April 2021 (Xu Zhao 3) (the last adopted in the witness box on 5 May 2021). Xu Zhao 1 is read limited to the reading of the documents annexed to Xu Zhao 1. The respondents also tendered a folder of documents kept by Mr Xu Zhao[6];
[5]The date used to identify Wang 2 with the witness in the witness box was the date it was filed: 6 April 2021
[6] Exhibit 8
Respondents’ witnesses in China
(e)Mr Zhao, an independent sales agent living in Jilin Province in China, relevantly working from 2016 to 2018. Mr Zhao speaks Mandarin, and has no English. The affidavit Yang Zhao 1 (which was made in English and purportedly sworn on 11 January 2021), was translated into Mandarin for Mr Zhao at the commencement of his oral evidence on 20 April 2021 by the interpreter and adopted by the witness, and the certified translation into English was tendered. The second affidavit of Mr Zhao stated to have been made 6 April 2021 (Yang Zhao 2) relates to the circumstances in which Mr Zhao affixed his signature to Yang Zhao 1. It was not adopted by Mr Zhao in the witness box but was received into evidence as part of Exhibit 2, together with a certified translation into English;
(f)Mr Yanfu Lv, an engineer based in Jilin Province, China. Mr Lv speaks Mandarin, and has no English. Mr Lv made 2 affidavits relied upon at hearing: the first affidavit in English made 11 January 2021 (Lv 1) and translated into Mandarin, and a second affidavit written in Mandarin dated 5 April 2021 (Lv 2) (which was certified as translated from English on 22 March 2021), and translated into English certified as translated on 6 April 2021 (see below). Both of Mr Lv’s affidavits (which were signed but not witnessed) and their translations form part of Exhibit 3.
Ms Wang, Mr Yang Zhao, and Mr Lv each adopted the Mandarin versions of their written evidence, and were each cross‑examined with the assistance of a Mandarin-English interpreter.
The respondents also read 2 affidavits of Mr Xiaoshu Liu, a NAATI translator based in Queensland: affidavits affirmed 7 April 2021 (Liu 1) and 8 April 2021 (Liu 2). Mr Liu was not required for cross‑examination. Mr Liu attested as to the accuracy of English and Mandarin versions of Ms Wang’, Mr Yang Zhao’ and Mr Lv’s witness statements and affidavits, and provided certified translations of the second affidavits of those witnesses. By his second affidavit Mr Liu verified a number of English translations of Chinese language documents annexed to the written evidence of Mr Cui and Mr Xu Zhao, and of certain stamped pages of Mr Yang Zhao’ and Mr Lv’s affidavits, and provided certified translations into English of a number of documents from Mandarin into English.
Respondents’ accountant and solicitor did not give evidence at hearing
As I have adverted to above at [35A], at hearing the respondents did not read affidavits of, or otherwise adduce evidence from, either Mr Tian, accountant, or from Mr Xin Jin, a solicitor employed by the respondents’ solicitors (except an affidavit from Mr Jin relied upon in support of the respondents’ interlocutory application to withdraw an admission). Earlier, in opening submissions the respondents had identified both Mr Tian and Mr Jin as their witnesses. The applicants at section C.2 [13] in their closing submissions observed that the respondents relied on evidence from Mr Tian, and from Mr Xin Jin. In their closing submissions in answer at [3]-[4] the respondents identified the respondents’ witnesses as including Mr Tian, and advised that, with one minor exception (not relevant for present purposes), they agree that section C.2 of the applicants’ submissions ‘accurately states the sources of that evidence’.
Respondents’ recent application for consideration of affidavit evidence of Mr Tian
45A. As I have said at [35A], in early 2023 I informed the parties that I did not intend to have regard to material not formally read onto the record or formally tendered at the final hearing. In closing submissions both parties proceeded on the basis that the affidavits had been read. Neither party subsequently identified the omission when several months later they jointly provided to the Court copies of the affidavit evidence marked with the Court’s evidentiary rulings.
45B. In March 2023, in the circumstances I have summarised at [35A], the respondents sought the opportunity to address the Court on the issue whether the Court should have regard to portions of the affidavits of Mr Tian affirmed 13 January 2021 (Tian 1), paragraphs [1]-[4], and 15 March 2021 (Tian 2), paragraphs [1]-[5] (I refer to these portions of Tian 1 and Tian 2 collectively as the Tian paragraphs), notwithstanding that Tian 1 and Tian 2 were not read at hearing. The respondents confirmed that they do not seek to rely on affidavits of Mr Jin.
45C. In their short submissions on this issue, the applicants first state that they neither object nor consent to the Court having regard to the Tian paragraphs now pressed; they make submissions in order to assist the Court to identify and apply the relevant legal principles, and in light of the respondents submissions. The applicants submit that on a correct application of the law, the Tian paragraphs ought not be taken into account.
45D. As the applicants contend, the respondents’ failure to read Tian 1 and Tian 2 at hearing appears to be an inadvertent omission, although the respondents do not acknowledge any oversight. The respondents submit they do not require leave to reopen, but if leave is required, they should be granted leave to reopen to read and rely on the Tian paragraphs. In sum, they say that the Court is not required to disregard affidavits (or portions of affidavits) because they were not formally read if it otherwise appears they were relied on, and it is obvious that both parties proceeded on the basis that the respondents relied on the two Tian affidavits.
45E. I consider that the respondents require leave to re-open. As Refshauge J succinctly expressed the principle in Kingston v Australian Capital Territory [2011] ACTSC 165 at [72]: “It is a fundamental rule of the adversarial system of the common law under which we operate that a judge should not rely on evidentiary material that has not been tendered.” See also The Environment Centre NT Inc v Minister for Resources and Water (No 2) (2021) 399 ALR 68; [2021] FCA 1635 at [153]‑[154], and Sealed Air Australia Pty Ltd v Aus‑lid Enterprises Pty Ltd (2020) 375 ALR 324; [2020] FCA 29 at [177].
45F. The principles on re-opening are well settled.
45G. The relevant principles were usefully summarised recently by White J in Matson v Attorney‑General (Cth) [2021] FCA 161 at [178]-[181]. The overriding principle is the interest of the administration of justice having regard to the circumstances of the case. The matters bearing upon the interest are various. They include, relevantly:
(a)the significance of the additional evidence in the context of the hearing;
(b)the explanation for the evidence not having been led at the hearing;
(c)the potential detriment to the applying party if the application is refused; and
(d)any delay by the party seeking leave.
45H. To the above matters should be added the overarching principles set out in ss 190 and 191 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act). In cases of inadvertent error, particular matters of relevance have been described as including whether the additional evidence is so material that the interests of justice require it be admitted, and whether the evidence, if believed, would most probably affect the result, and that no prejudice was suffered by the other party by reason of the late introduction of the evidence: see Murray v Figge (1974) 4 ALR 612 at 613-4; in this Court, see Kemp J in Chong v Ha (No. 2) [2018] FCCA 320 at [41].
45I. The delay is considerable, only being agitated following my identification of the omission, and not otherwise explained. Although the respondents’ failure to acknowledge their oversight is unsatisfactory, I am satisfied that the omission was inadvertent. I am also satisfied on the material before me that the applicants had notified the respondents that they had no objections to Tian 1 or Tian 2, and that they did not require Mr Tian for cross‑examination. Both parties proceeded to make closing submissions on the basis that the affidavits were relied on. The applicants do not identify any potential detriment if the Tian paragraphs are admitted.
45J. Mr Tian is an accountant at Yi Star’s external accounting firm, Mayhuang & Co. The Tian paragraphs comprise Mr Tian’s evidence of who instructed the firm and on what matters. Tian 1 [1]‑[4] are introductory. There Mr Tian sets out who he is, and the firm’s relationship with Yi Star. In Tian 2 [1]-[5], after restating the introductory matters Mr Tian attests that:
(a)after registering Yi Star, the firm initially received instructions from Ms Wang up until 2017;
(b)“once the E‑Star Karaoke business commenced trading in around August 2017”, Ms Wang instructed the firm to act on all instructions received from Mr Cui. Thereupon Mr Cui began instructing the firm for all operational matters;
(c)Ms Wang continued providing instructions “limited to construction matters”, until she ceased her directorship;
(d)Yi Star commenced the business of the Restaurant “later on in 2017”, and the firm began receiving instructions from Ms Zhang in respect of the Restaurant, and continued to receive instructions from Mr Cui regarding E‑Star Karaoke;
(e)as to general matters, the firm consulted either Ms Zhang or Mr Cui. Once Ms Zhang ceased her directorship, the firm took instructions only from Mr Cui.
45K. The respondents submit that the Tian paragraphs are relevant first, to the claims of authorisation made against Ms Zhang and Ms Wang, secondly, potentially to the defence of innocent infringement, and thirdly in relation to the claim for additional damages under s 115(4) of the Copyright Act. The applicants submit that Mr Tian’s evidence can go only to identifying the individuals who were providing instructions on accounting matters, and not more broadly to either Ms Zhang or Ms Wang’s involvement in, or knowledge of, Yi Star’s E‑Star Karaoke business, and in any event, that they may not have given instructions to Mayhouang & Co on accounting matters relating to E‑Star Karaoke is not responsive to the authorisation case put against them, as to which see the applicants’ closing submissions. Thus, they submit the Tian paragraphs do not constitute material or significant evidence in the context of the hearing, nor would they affect the result on the issues identified by the respondents.
45L. I consider that there is substantial merit in the applicants’ submissions. Whilst I consider the Tian paragraphs of limited materiality for the reasons submitted by the applicants, however, I am not persuaded that there is any detriment to the applicants in granting leave and admitting the Tian paragraphs. In the circumstances, I will grant leave to the respondents to reopen their case for the limited purpose of reading the Tian paragraphs, and order that the respondents pay the applicants’ costs on and arising from this application.
Clarification of irregularities of certain respondents’ witness statements and affidavits
In written opening submissions, Mr Robinson, counsel for the respondents, described the respondents’ written evidence sought to be relied on as “at first blush complex” and as requiring “some explanation”. This was an understatement.
First, the written evidence of 2 of the respondents’ witnesses – Mr Cui and Mr Xu Zhao – each took the form of a first affidavit then, wishing to “clarify and elaborate on parts of that evidence” as counsel put it, the deponent repeated the text of the first affidavit in a second affidavit, underlining the evidence to be maintained, and deleting with strike through that evidence sought to be “clarified”, which the witness then disavowed, explained, supplemented or added to, as the case may be. Whilst additional documentary materials were annexed to the second affidavit, the materials annexed to the first affidavit were not re‑annexed, thus requiring both affidavits to be read.
Secondly, other of the respondents’ witnesses’ written evidence was in inadmissible form, comprising purported affidavits made in English signed by deponents who could neither read nor speak English and with no mark evidencing that they were witnessed. The first affidavits of Mr Yang, Mr Zhao and Mr Lv, each of whom speaks Mandarin, but has no English, and lives in Jilin Province, China, fall within this category. The deponents then made a second affidavit in Mandarin, explaining that they made their first affidavit because they were advised by the respondents’ solicitor, and, where the deponent was located in China, a Notary Public, that it was a correct translation of the Mandarin text which they had reviewed and knew to be correct.
Similarly in this second category of evidence, Ms Wang, the fourth respondent, located in Queensland, whose primary language is Mandarin, and who attests that she speaks and reads very limited English, affirmed a first affidavit made in English, and a second affidavit in Mandarin.
As I have said above at [44], Mr Liu was provided a Mandarin text version and the English text version of each of Mr Zhao’, Mr Lv’, and Ms Wang’s first affidavits. He attests that in respect of each of those affidavits he has compared the texts (Mandarin as against English), and confirms that they accurately reflect one another. Mr Liu was provided a copy of the second affidavits of each of those deponents (in Mandarin), and undertook a translation of each of them into English. He exhibits each of the Mandarin and English versions of all the affidavits he has sighted and his translations.
At the hearing I granted leave to the respondents to adduce oral evidence in chief from Messrs Yang Zhao and Lv and from Ms Wang in each case to confirm the correctness of their written evidence. The applicants’ counsel exhibited significant forbearance and cooperation in not opposing the respondents’ endeavours to remedy their problems with the evidence at hearing.
Below, when describing the evidence of Mr Yang Zhao, Mr Lv, and Ms Wang I take into account the fact that the evidence has been translated into English or Mandarin as the case may be, and in oral evidence in chief confirmed by the witness as their evidence and as accurate, and the English translations of which are in evidence through Mr Liu’s affidavits.
THE PARTIES’ EVIDENCE
I next set out an overview of the written and oral evidence of each of the parties’ witnesses.
The currency of the parties’ and witnesses’ positions, business activities, employment, and the like, and the licensing rights and other factual matters are as at the dates of the hearing, unless I state otherwise or it appears obvious from the context. Unless the context makes clear otherwise, my stating without qualification a fact is a finding of the fact I state.
The applicants’ evidence
It is convenient to state here that I found each of the applicants’ witnesses’ credible and reliable. I am satisfied that they each gave their evidence honestly, and accurately to the best of their recollection. Whilst they readily made concessions when appropriate, their written evidence was not relevantly impugned in cross‑examination. I accept their evidence.
Mr Chan
Mr Chan has been managing director of Top Plus since December 2010, and a director of the company. He is authorised by Top Plus to make his affidavits, and has full access to Top Plus records for that purpose. Prior to 2010 he acted as a consultant to Top Plus in relation to copyright. As at the date of Chan 1, in addition to his duties at Top Plus, Mr Chan had 18 years’ experience in the operation and management of individual karaoke venues in Australia. Prior to becoming a director of Top Plus, he operated a company that acquired the Queensland licensing rights for a number of KMVs from Top Plus. Mr Chan estimates that since about 2010 he has personally visited about 50 to 80 karaoke outlets throughout Australia and New Zealand. He attests that by reason of his industry experience he is very familiar with the business of karaoke outlets and karaoke systems in Australia.
KMVs, karaoke venues and distribution
Mr Chan gives evidence of the features of KMVs and the characteristics of modern karaoke systems and the distribution of KMVs. Mr Chan’s evidence is not disputed.
A karaoke machine is a music system such as a VOD system, which plays simultaneously a video clip of a song with subtitled lyrics and the sound recording (with the choice of the artist’s vocal recording, or backing track), and is equipped with microphones for the use of persons to sing along with. Modern karaoke systems are ‘closed end’ systems where the KMVs played in the karaoke rooms are locally stored copies of those KMVs, which may be stored on a central server to which the karaoke equipment in each karaoke room is connected (server‑based karaoke), or local copies may be stored on the karaoke equipment in the room independently of each other room (room‑based karaoke). In Mr Chan’s experience it is common for karaoke equipment to be sold by manufacturers and suppliers with a large number (often tens or hundreds of thousands) of KMVs pre‑saved to them.
Since about 2017, Mr Chan has observed newer systems being used in karaoke outlets in Australia which operate by downloading KMVs on demand over the internet onto local storage from a remote server operated by a third party. For these newer systems:
(a)the karaoke equipment may be sold with or without KMVs pre‑saved;
(b)the company selling the equipment, or another company (the KMV supplier) provides the venue operator with access to a website or other repository published online that contains a large number of KMVs available for download;
(c)the KMVs that are available for selection by the venue’s customer may be a subset, or the entirety, of the KMVs made available by the KMV supplier;
(d)when a request to play a particular KMV is made by a customer:
(i)if there is not a locally stored copy of that KMV, a request is sent by the outlet’s server or karaoke room computer to the KMV supplier’s repository and begins downloading a copy of that KMV;
(ii)the customer is shown a progress bar beginning at 0% which progresses to 100% as the KMV is downloaded to local storage; and
(iii)upon completing the download, the KMV is subsequently played from local storage to the room which requested the KMV; and
(e)the downloaded KMV remains saved on the local KMV server or karaoke room computer for access by future customers or patrons.
These systems remain ‘closed’ systems because the KMVs that are played in the venue are those that have been first downloaded onto the karaoke venue’s local storage before they are played to the customer, rather than streaming directly from the internet.
The respondents accept that the Thunderstone system installed and used at the Premises is a closed server-based karaoke system. Accordingly, it is a Karaoke System within the meaning of the term in the applicants’ Licence Agreements (which I define and discuss below).
Top Plus’ licensing rights
Mr Chan gives evidence of what he understands to be the exclusive rights held by Top Plus in the KMV Films (as I have said, limited to his understanding). Mr Chan says that the exclusive rights were conveyed by Universal Music as owner and licensor to Top Plus as the licensee by a number of written licence agreements for the period between 10 March 2006 and 31 December 2020 (Licence Period).
Relevantly for the period of infringement alleged, Mr Chan puts in evidence the written licence agreements entered into between the applicants dated respectively 1 January 2017 (2017 Licence Agreement) and 1 January 2019 (2019 Licence Agreement), and two letters from Universal Music of the same dates, each entitled ‘Authorization Letter’ (Authorization Letters). Each Licence Agreement is for a term of 24 months from the date of the agreement, and contains a first option to Top Plus to renew the agreement on terms to be agreed (together, the Licence Agreements).
Accompanying each of the Licence Agreements, each of the Authorization Letters is made under Universal Music’s letterhead and logo, signed on Universal Music’s behalf by Mr Duncan Wong, and addressed ‘To Whom It May Concern’. Each Authorization Letter notifies recipients that Top Plus is Universal Music’s exclusive licensee in relation to KMVs for the relevant period of the licence, summarises the rights granted, and encourages responsible companies and individuals in Australia and New Zealand to cooperate with Top Plus “to obtain the legal rights to offer karaoke singing services relating to our karaoke music videos”, and informs the recipients that Universal Music will aggressively protect the copyright rights of the company.
Mr Chan attests to his understanding that the rights granted under the Licence Agreements and the earlier licence agreements entered into between the applicants include the exclusive right to (each term italicised below is a defined term in the Licence Agreements):
(a)reproduce and authorise the reproduction of the KMV Films in karaoke outlets via karaoke systems;
(b)cause the KMV Films to be seen and/or heard in karaoke outlets via karaoke systems, or authorise them to be seen and/or heard in karaoke outlets via karaoke systems;
(c)sub-license the rights in (a) or (b) above to, and collect fees from, karaoke outlets in Australia.
Mr Chan attests to Top Plus receiving a Confirmation Letter dated 6 August 2020 from Universal Music to Top Plus sent by Duncan Wong to Mr Chan, which letter states it confirms that the KMV Films detailed in the Spreadsheet attached to it (defined at [8] above, and discussed further below) have been exclusively licensed to Top Plus for the territory of Australia and New Zealand during the Licence Period.
Top Plus’ licensing regime and Information Kits
Mr Chan gives evidence of the licence fees nominated by Top Plus under its licensing regime for the KMV Films over the Licence Period, published in the standard licencing Information Kits prepared annually by Top Plus and sent out to licensees and potential licensees. The Information Kits published in 2017, 2018, 2019 and 2020 are in evidence through Mr Chan.
I am satisfied that, save that in each subsequent year the nominated annual Licence Fee stated as payable in the Kit increases by $100, the Information Kits for each year in from 2017 through to 2020 inclusive are substantially the same.
The Information Kits identify Top Plus as having been appointed by a number of record companies to be their exclusive licensee, with the right to grant non‑exclusive licences and collect licence fees for the use or reproduction of the record companies’ KMVs. The Information Kits direct attention to Top Plus’ website and extend an invitation to contact Top Plus directly at its email address, if the recipient has any questions.
The Information Kits also identify a selection of the KMVs’ artists and singers licensed to Top Plus which includes 3 of the artists in the KMV Films comprising the Infringement Examples (namely, Zhang Xue You, Chen Yi Xun, and Zhang Jing Xuan).
Written notification of rights and licensing activities
Mr Chan attests to using a systematic process which he established in 2014 by which Top Plus sends out letters to karaoke outlets in Australia that he knew to play Mandarin or Cantonese KMVs. Top Plus sends 3 types of letters every year: the first letter is sent in the January of each year or when Mr Chan becomes aware that a new karaoke outlet has commenced operation; the second letter is a first reminder sent in March of each year; and the third letter is a second reminder sent in May of each year (collectively, the notification letters). The notification letters are sent by Mr Chan to notify the recipient of Top Plus’ rights and licensing activities, to invite the recipient to become a licensee, and/or remind the recipient of unpaid licence fees.
Each round of notification letters is prepared using a template letter into which the relevant addressee and address for each outlet is inserted, the details of which Mr Chan obtains conducting Google searches, ASIC searches and/or as displayed on the karaoke outlet’s social media pages. Mr Chan then prints the letter so addressed and places it in a pre‑paid standard Australia Post envelope before Mr Chan repeats the process for the letter to the next karaoke outlet that he has identified. On the same day as the letter is prepared or the following day, Mr Chan takes the letters to an Australia Post Office and mails them in the post box.
Mr Chan attests that on each occasion he prepared and posted the notification letters to approximately 100 karaoke outlets. Top Plus’ standard practice is to send the letters by standard post. Mr Chan attests to having received a quote from Australia Post for approximately $1,200 to send 100 letters by registered postage with Australia Post (approximately $12.00 per letter), which he did not proceed with.
Mr Chan attests that Top Plus sent 9notification letters following the above procedure to the respondents in the period 1 September 2017 and 1 May 2019, and that he sent a further notification letter in December 2019, after the proceeding commenced. This tenth notification letter was sent by registered post to the same address as each of the earlier notification letters. The receipt of the first 9 notification letters is vigorously disputed by the respondents. I discuss the disputed receipts further in the context of the respondents’ defence of innocent infringement below. Receipt of the tenth notification letter is not disputed.
KMV Films Inspection List and instructions to Mr Wong
Mr Chan also gives evidence of the instructions he gave to Mr Wong to investigate infringing use of the KMV Films at the Premises in the Licence Period. Mr Chan instructed Mr Wong to attend E-Star Karaoke on 3 occasions: 23 December 2017, 19 December 2018, and 9 October 2019 (Infringement Dates). For each visit Mr Chan provided Mr Wong with a list of KMV Films, which he had prepared in about 2013 on a random basis, and since then occasionally added new KMVs to the list, but which otherwise remained the same for each of the 3 Infringement Dates (Inspection List).
The Inspection List used by Mr Wong (identified by each of Mr Chan and Mr Wong in their affidavit evidence) for the period 2015 to 2019 comprises a list of approximately 192 KMV Films, and lists details for each of those selected KMV Films, which the evidence establishes corresponds with details of those KMV Films in the Spreadsheet. These details for each of the KMV Films as listed in the Inspection List comprises (i) the Universal Music catalogue number (internal code given the KMV Film by Universal Music, also known as the ATS Ref), (ii) the name of the recording (that is, the song name, in Chinese characters or English, as the case may be, but not English Pinyin c.f. the Spreadsheet), (iii) the language (Cantonese, Mandarin and 1 instance of Taiwanese), the version (all original, save for 3 concerts and 2 music videos), (iv) the name of the artist (that is, the performer, in Chinese characters or English, as the artist identifies, but not English Pinyin c.f. the Spreadsheet), (v) the record company (mostly Universal Music, also Cinepoly, PolyGram and Go East), and (vi) year and place (which I infer from cross‑referencing with the Spreadsheet and the original KMV Films of the 10 Infringement Examples is the year and place of first publication, and which are mostly in the period 2008 to 2013, with an instance in each of 1992 and 1993, several instances in 2014 and 2015, mostly in Hong Kong, and some 16 instances, Taiwan).
Exemplified Infringements
To his affidavits Mr Chan exhibits inter alia:
(a)a copy of the original version of each of the 10 KMV Films that comprise the Infringement Examples;
(b)a copy of the photos and videos (identified below in the evidence of Mr Wong as the Footage) obtained by Mr Wong at the Premises of the KMVs he played on each of the Infringement Dates, and provided shortly thereafter to Mr Chan on a USB including the items of Footage identified in Schedule 2 of the applicants’ closing submissions corresponding to the 10 KMVs of the Infringement Examples played by Mr Wong;
(c)screenshots provided to Mr Chan by the applicants’ solicitors presenting still images of the evidence in the preceding sub‑paragraph (b); and
(d)a copy of an excel document that lists the KMV Films copies of which are captured in the Footage.
Schedule 2 to the applicants’ closing submissions is a summary of the details of the evidence of the 10 infringement Examples, in the case of the ‘original’ 10 KMV Films cross‑referenced to the corresponding details for that KMV Film in the Spreadsheet, and which I am also able to cross‑reference to the relevant 10 entries in the Inspection List, and in the case of the 10 copies, cross‑referenced to Mr Wong’s evidence of the Footage, with ‘pinpoint’ references to the screenshot or time on the video where the UML Logo or other detail evidencing (non‑exhaustively) that copyright – such as a UML Logo, or Universal Music’s name is depicted. In addition, Schedule 2 identifies the subset of instances of copying admitted by the respondents in the exchange of Notice to Admit Facts and Notice of Dispute.
Mr Duncan Wong
Mr Duncan Wong has been managing director of Universal Music since in or around 2011. He has 30 years’ experience in the music industry. Mr Duncan Wong is responsible for the day‑to‑day operation of Universal Music in Hong Kong including the signing of new artists by Universal Music, and Universal Music’s production, marketing and karaoke licensing operations.
The KMV Films
Mr Duncan Wong gives evidence about the process undertaken by Universal Music in the production of the KMV Films, including payment for that production, and the KMV Films that he attests are and have been since their release owned by Universal Music, and are the subject of exclusive licence to Top Plus, limited to his understanding of the Licence Agreements.
Mr Duncan Wong attests that the details of the KMV Films are contained in a database in Universal Music’s computer system which database is updated by Universal Music whenever it produces a new KMV or the rights are acquired with all the information relating to that KMV, thereby generating each time an up‑to‑date catalogue of all the KMV Films that Universal Music owns or controls. From that database a spreadsheet or list of all the KMV Films can be extracted. After updating the database of KMV Films whenever a new KMV is added to the KMV Films (UML catalogue), Universal Music then puts that new KMV Film onto hard disks and couriers the disks to its licensees in Hong Kong and Australia.
It is convenient to record here that, relevant to the KMV Films, Ms Tong also gives evidence (including under cross‑examination), inter alia, of:
(a)the process for payment of invoices issued by producers, directors and production houses engaged by Universal Music to produce the KMVs;
(b)her or her staff sending the new KMVs to Top Plus every 3 to 4 months; and
(c)the maintenance and updating of the database of KMV Films by her karaoke team whenever Universal Music has a new KMV, which includes their clearance of the publishing right and the sound recording right and asking the different ‘copyrighter’ (by which I understand Ms Tong to mean the copyright holder) to sign an assignment, and then updating in Universal Music’s database to make sure Universal Music has the proper agreement,
which evidence confirmed and expanded on Mr Duncan Wong’s evidence summarised above. I discuss Ms Tong’s roles and responsibilities and her evidence further below.
The KMV Films Spreadsheet
Mr Duncan Wong annexed to his affidavit the Spreadsheet listing the 6,214 KMV Films recorded in Universal Music’s database, which he had sent to Mr Chan under cover of letter dated 6 August 2020 (this is the Confirmation Letter I describe above that Mr Chan attested to Top Plus’ receipt of, and annexed both documents). In oral evidence Mr Duncan Wong confirmed that the details of the Spreadsheet were extracted from Universal Music’s database of KMV Films as I have set out above, which is a living document in the sense of being a running list that recorded, at any particular moment, the KMV Films owned and licensed by Universal Music. Mr Duncan Wong was not challenged on his evidence as to the accuracy of the information recorded in the database or the Spreadsheet or that the latter was extracted from the former. I accept it.
For each of the 6,214 KMV Films listed in the numbered rows (1 to 6,214) in the Spreadsheet, the following details are organised in a separate row for each KMV Film across 10 columns (which I list as (i) to (x)):
(i)in the first column, the row numbers 1 to 6,214 sequentially;
(ii)the reference code internally assigned by Universal Music to the KMV, referred to as its ‘ATS Ref’;
(iii)the song name of the KMV - written in Chinese characters or English, as the case may be;
(iv)the song name in ‘English Pinyin’ - that is, a transliteration of the Chinese characters of the song name into the Roman alphabet, and if an English song name, repeating that name from column (iii) in this column;
(v)the language of the KMV, being Cantonese, Mandarin, English or Taiwanese;
(vi)the version of the KMV - stated variously to be concert, music video, or original;
(vii)the name of the singer of the KMV in Chinese characters or English;
(viii)the ‘English Pinyin’ name of the singer - namely for the singer, as per column (vii);
(ix)the ‘Logo’ on the KMV - stated variously as UML, Polygram, Cinepoly, Go East, and EMI (which the evidence establishes are all record and film labels identified in Schedule (A) to the Licence Agreements, and Universal Music’s and its subsidiary companies’ names and record and film labels), and
(x)year and place of first publication of the KMV (on my perusal, the years range from 1992 up to 2019, whilst the places are principally HK – that is, Hong Kong, or in some instances TW – that is, Taiwan).
When cross‑examined that the Spreadsheet included KMV Films first published in 2019, Mr Duncan Wong readily conceded that Universal Music could not have licensed Top Plus those particular KMV Films any earlier than 2019. This is readily apparent on the face of the Spreadsheet, and does not undermine the evidence that Universal Music owned and/or controlled the KMV Films including those listed in the Spreadsheet, having regard to their date of first publication.
I am satisfied by Mr Duncan Wong’s, and Ms Tong’s evidence that the UML catalogue is an accurate record of all the KMV Films the cinematograph film copyright in which Universal Music owns and or/controls, and that the Spreadsheet evidences all the KMV Films the cinematograph copyright in which is owned and/or controlled by Universal Music as at the date it was extracted from the database on or about 6 August 2020. I am satisfied further, that where a KMV Film is recorded in the Spreadsheet as first published at an earlier date, that that film was owned and controlled by Universal Music or the identified subsidiary from that date.
At [19] above I adverted to Universal Music’s expansion of its business by merger and acquisition of record labels, whose individual copyright in a wide spectrum of repertoire has been assigned to Universal Music. In evidence are written assignments of copyright and other intellectual property rights to Universal Music by EMI (dated effective as of 1 July 2013), Cinepoly (dated effective as of 2 March 2015), and Go East (dated effective as of 2 March 2015).
Each of the written assignments is claimed confidential and an order made 22 April 2021 gives effect to that claim. Accordingly, my consideration of those agreements as relevant to the issues to be determined is set out in the confidential paragraphs marked Confidential Annexure B in a schedule to these reasons, and is redacted from the published reasons.
Ms Tong
Ms Tong was born, raised and educated in Hong Kong. She is fluent in both written and spoken Chinese and in English. From 2018 and continuing Ms Tong has been the Finance Director of Universal Music. She has been employed by Universal Music in various roles, commencing in 1994 as an accountant, progressing to senior accountant, and from 2002 to 2014 being employed as a Finance Manager. As part of her role as Finance Manager, as well as overseeing the managing of the finance department, she drafts and reviews contractual agreements between Universal Music and other parties, including artists, licensors and licensees such as Top Plus. I have summarised above her evidence on these matters in relation to the maintenance and updating of the database of the KMV Films.
In her role as Finance Director she oversees and manages the conduct of the financial activities of Universal Music as described above, and also provides direction and assistance regarding financial matters to the Managing Director (that is, Mr Duncan Wong) and executive management. As a result of her employment with Universal Music, Ms Tong was authorised to make her affidavits on behalf of Universal Music and for the purpose of her evidence had full access to Universal Music’s records.
As I have adverted to above, Ms Tong gave evidence about the payment of invoices issued by producers, directors and/or production houses engaged to produce KMVs. She gave evidence of the International Standard Recording Code (ISRC), and Universal Music’s application for and allocation of ISRC codes to most of its songs and music videos (which latter are shared with the associated KMV).
Ms Tong also gave evidence about certain opening credits information that she identifies appear in the opening credits on the KMV Films to which the Infringement Examples correspond (that is, the 10 sample or ‘original’ KMV Films). This information relates to the original sound recording for each KMV Film (separately to the KMV Film itself), such as the identities of the composer, lyricist, producer and original publisher, which information is included in the KMV as a way of giving acknowledgment to persons associated with the production of the original sound recording. Ms Tong annexes screenshots and English translations of the Chinese text. I note that the UML Logo is also depicted on screenshots for most of the KMV Films of the Infringement Examples, and in at least 2 instances together with a logo for Top Plus.
Ms Tong was not challenged on any of the above evidence. As I have said, I accept it.
Ms Tong has known Mr Chan for over a decade. Mr Chan is Universal Music’s main contact at Top Plus. Ms Tong gave oral evidence that most of Ms Tong and Mr Chan’s communications in the relevant period took place via WeChat orally or by text, often twice a month, but sometime bi monthly or quarterly, depending on how the business is going.
In these communications Ms Tong updated Mr Chan about the new artists that Universal Music had signed. She did not tell Mr Chan the name of each KMV of the artist, because all the artists were signed as a recording deal with Universal Music, so all the KMVs and all the sound recordings performed by the artist is owned by Universal Music. In her affidavit evidence of the opening credit acknowledgements of lyricists and composers on the KMV Films I have set out above Ms Tong makes clear the difference between them and the performing artists signed to recording deals with Universal Music.
Ms Tong’s explanation is consistent with her and her staff’s activities in relation to entry and updating of the details for new KMV Films in the database (see above) and her evidence of her role in drafting and reviewing artists and contracts. In the relevant period Ms Tong’s staff sent copies of new KMV Films added to the UML catalogue to Top Plus every 3 to 4 months.
I interpose here to deal with a point raised by the respondents. The respondents’ in closing submissions assert that “it cannot be assumed that all of the KMVs by a particular artist would be owned by a single publishing company”, and by way of example state categorically that the Spreadsheet contains “only seven KMVs from the artist 葛仲珊”, whilst the ‘hit rate record’ (a document obtained by Mr Cui stated to be the results of a search of the Thunderstone system in December 2020, after deletions of KMVs made by Mr Lv, see later in these reasons), shows that there were “at least [emphasis in submission] 22 KMVs by 葛仲珊 available on the Thunderstone system.” The respondents ask the Court to conclude that the Spreadsheet, and by extension the UML catalogue, did not contain all of the KMVs made by that artist.
A simple perusal of the Spreadsheet, however, reveals that the respondents’ claim is incorrect. Within 2 pages of the Spreadsheet (the print copy in evidence), there are 22 KMV Films by 葛仲珊 as solo artist (including the 7 KMV Films identified by the respondents), and a further 24 KMV Films where they are part of a duo, or trio of artists. The English Pinyin name of the artist 葛仲珊 is ‘Tan Yong Lin’, which name is also listed for each of the 46 KMV Films. I have also found several more KMV Films by the same artist listed on previous pages in the Spreadsheet. In the face of this evidence, and that of Ms Tong, that when an artist signs to Universal Music it acquires the KMVs they make, it is reasonable to conclude that the ‘hit rate record’ shows that the KMVs that the Thunderstone system contains are least 22 of the 46 KMV Films by the artist 葛仲珊 (English Pinyin ‘Tan Yong Lin’), and it is reasonable to infer unauthorised copies of those KV Films. In the face of this evidence, I am not persuaded by the respondents’ submission.
In oral evidence Ms Tong said that she had sent Mr Chan a full list of the KMV Films then licensed by Universal Music at the time it had a legal case running in Hong Kong and it was using that list for that legal proceeding. Ms Tong thought that she had sent the list by email in 2018 or 2017, and accepted that perhaps she had done so in or after the latter half of 2018. Whilst Ms Tong could not recall precisely when she sent the list in that period, she was not challenged on her evidence that she had done so at the time of the Hong Kong legal case. Ms Tong could no longer access her pre‑2020 emails following her PC having been changed, and IT staff were not able to restore all her earlier emails. I am satisfied with Ms Tong’s explanation. Having reviewed the transcript closely, it is reasonable to infer, and I infer, that the list Ms Tong emailed to Mr Chan was a list obtained from Universal Music’s electronic database of the KMV Films in or around 2017 or 2018 comprising the full list of KMV Films then owned and/or controlled by Universal Music, and accordingly is an earlier version of the Spreadsheet.
Mr Ho Yin Wong
Mr Wong is a graduate student who has undertaken investigative work for Top Plus since about 2017 at a number of karaoke outlets in Queensland. Relevantly, that work included investigating whether Yi Star was offering any of the KMV Films to its customers at the Premises, and collecting evidence of such activities by reference to the Inspection List provided to him by Mr Chan.
Mr Wong gave evidence of the steps taken by him to collect photographic and video evidence at the Premises whilst visiting E-Star Karaoke as a paying customer in the course of his investigative work on each of the Infringement Dates (viz., 23 December 2017, 19 December 2018, and 9 October 2019), and what he was told and observed in the course of those 3 visits. He spoke to the receptionist on each work visit, and took note of the features of the room he hired on each visit. Whilst during the course of his visits he observed that there were 2 floors at the Premises, and noted that there were other rooms being used for karaoke performances on those occasions, as he heard the sounds of karaoke from those rooms, he did not count the rooms being used, nor enter those other rooms. In cross-examination he readily accepted that he did not know whether all rooms at the Premises had the Thunderstone system.
Mr Wong is a keen karaoke enthusiast. He attended karaoke venues in the later 1990s. He gave affidavit evidence of his familiarity with karaoke systems and karaoke outlets, and his work for Top Plus in collecting evidence of use of KMV Films at “numerous karaoke businesses” in Queensland in the period he has done investigative work for Top Plus. In his written evidence he attested that as well as the Inspection List that he was given by Mr Chan for each of the 3 visits to the Premises, on each occasion Mr Chan also gave him each of the original KMV Films referred to in the Inspection List. He was not challenged on this evidence.
Mr Wong’s evidence is straightforward. On each of the 3 visits he attended the Premises, he spoke to the receptionist, hired a karaoke room and was directed to it by the receptionist, and used the VOD system in the room to access several KMVs. On each visit, through the VOD system in the room he selected a series of different KMVs from those identified in the Inspection List. He then took photos (for the 2017 visit), or recorded video footage (for each of the 2018 and 2019 visits) of the opening parts of the KMVs he played through the system, which photographs and video footage is in evidence in the Infringement Examples (I have described it as the Footage). Mr Wong documents multiple instances of use of 8 of the 10 Infringement Examples on more than one of the 3 visits, which instances are conveniently summarised in Schedule 2 to the applicants closing submissions, and which I have set out in Table 1 of Annexure A to these reasons.
The respondents have admitted by their Notice of Dispute dated 7 January 2021 to causing each of the 10 Infringement Examples to be seen and heard in public, and communicated, on various of the 3 dates that Mr Wong collected evidence of infringement. As I have said in the immediately preceding paragraph, Mr Wong’s affidavit evidence establishes more than the instances admitted. The evidence establishes the 10 instances of the Infringement Examples admitted (that is, at least one of the 10 Infringement Examples was seen, heard and communicated to the public on one of the 3 dates), and also that 8 of the Infringement Examples were also seen, heard and communicated on more than one of those 3 dates.
In cross-examination, Mr Wong told the Court that he had attended the Premises as a customer with other friends and colleagues on additional occasions over the 2 years (2017-2019) and saw a few more of the KMV Films he knew as Top Plus songs on the system. Mr Robinson put to him that when Mr Wong was not working he did not check “whether any of Top Plus’ songs were on the system”. Mr Wong explained: “I did check that. … Just like habit. Just like what you can usually do. You would see the song list, and it’s not hard to find the – there are heaps.” At the time Mr Robinson did not object to that evidence adduced in cross‑examination. In re‑examination Mr Wong was asked to clarify what he meant by songs in this case, and identified the Inspection List, as the “song (sic) in the list that I usually work with”. Mr Robinson then objected on the basis of the pleading and that it did not arise out of cross‑examination. I allowed further cross‑examination by Mr Robinson, which was as follows:
MR ROBINSON: Mr Wong, you’re not suggesting, are you, that every time you attended this karaoke venue on your personal time and not for work that you carried with you that list?‑‑‑I don’t carry, but I already remember. It’s in the ..... I’ve been working with it over hundred times. So if that – most of them I actually can remember them.
I see. Nothing further, your Honour.
As to the former objection, Mr Robinson stated in closing submissions that he would submit that the evidence cannot be relied upon. As I have said above, I have held that the applicants have not restricted their case or the relief they seek to the Infringement Examples.
Mr Wong’s evidence was fairly adduced in cross‑examination, and permissibly clarified in re‑examination. The applicants are entitled to rely on it. When read with Mr Wong’s written evidence that he is a karaoke enthusiast, and has dealt with the Inspection List over the course of 2 years as an investigator for Top Plus (as at the date of his affidavit), and been provided with copies of the KMV Films listed, I am satisfied that Mr Wong visited the Premises in his private capacity, and when visiting the Premises in his private capacity Mr Wong did identify that more KMV Films were listed as available on the Thunderstone System at the Premises than the Infringement Examples. I reject the respondents’ submission that the oral evidence of Mr Wong should now be rejected or struck out.
Further, and in any event, the respondents evidence of the hit rate record (discussed in the context of pecuniary relief below), and my finding on the number of KMV Films of the artist 葛仲珊 (see at [98] above), further persuades me to the necessary standard under s 141 of the Evidence Act that Yi Star infringed more than 10 of the KMV Films, and had made available at E-Star Karaoke more than 10 of the KMV Films, not limited to 10 instances, over the Infringement Period. The applicants however do not seek declarations of infringement for any instances other than the Infringement Examples on the admitted dates. This is appropriate.
Mr Lam
Mr Lam gives evidence about his role as marketing director at Top Plus. Mr Lam’s primary role was to contact customers. Mr Lam also gives evidence of his attendance at E-Star Karaoke in December 2018, and subsequent communications between him and Mr Cui.
On or about 22 or 23 December 2018, Mr Lam on behalf of Top Plus attended the Premises. After being informed by the person on the front desk that Mr Cui was away, Mr Lam left an envelope enclosing a copy of the Information Kit for 2019 and a Top Plus KMV licence application form.
Mr Lam attests to receiving a call from Mr Cui on or about 21 January 2019, in which the pair spoke Mandarin. Mr Lam gives the following English translation of his account of the discussion:
Mr Cui: How much do I need to pay for a karaoke music video licence?
Mr Lam: The Information Kit I gave you contained the pricing per room per year.
Mr Cui: Can you give me a discount?
Mr Lam: I cannot give a discount over the phone we would need to meet in person to discuss a discount.
On 23 January 2019, Mr Lam met with Mr Cui at a Chinese restaurant on the Gold Coast near Sea World (23 January Meeting). Mr Lam was driven to and from the restaurant by Mr Chan. Mr Lam and Mr Cui spoke in Mandarin. Mr Lam gives the following English translation of his account of the conversation:
Mr Lam: You need to pay the license fee. Top Plus is the licensee for all karaoke music videos in the UML catalogue.
Mr Cui:We confirmed from Beijing Thunderstone Technology that they do not have the right in Australia. But we cannot pay the licence fee because it is too high. We want to pay but we cannot pay the amount you have demanded.
Mr Lam:You should not have used the karaoke music videos if you knew the price was too high. If you do not agree to pay the fee we will have to put the case to the court. You are infringing if you use the videos without a licence from Top Plus.
Mr Cui:I know that we are infringing, but the reason is because your price of the licence fee is too high and so you are forcing us to do this. I have discussed the price with other outlets. I have discussed the price with other outlets in Australia and we think the fees should be $3,000 for every 10 rooms per year.
Mr Lam: If you want to negotiate a special discount I will talk to my boss.
Mr Cui: I have to think about it.
Mr Lam: Send us your offer and any information by next Friday.
Mr Lam’s evidence of the above was not challenged in cross‑examination. Mr Cui, however, in cross‑examination said that Mr Lam’s evidence omits that Mr Cui then said immediately after the above that “we can pay. We can pay licence fee together if that is reasonable”. Mr Cui had the opportunity in his written evidence to put his version of the above conversation. He did not. I am not persuaded that the further statement proffered by Mr Cui in cross‑examination is other than a recent invention.
Mr Lam attests to telling Mr Cui at the 23 January Meeting about previous court decisions including in Top Plus Pty Ltd & Ors v K Square Pty Ltd & Ors (No. 2) [2010] FMCA 67.
In Lam 2, Mr Lam explained that in his earlier affidavit he had stated that Mr Cui had said in the 23 January Meeting words to the effect “fees should be $3,000 for every 10 rooms per year” (see above) because Mr Cui’s actual words were “I will pay $1,500 for 10 rooms for each six months”. That is, Mr Lam extrapolated from the six month period to the full year, consistent with Top Plus’ licensing regime which specifies an annual fee on a per room basis, whilst allowing for payments for part years where the outlet commences operation part way through the year (see in the context of compensatory damages, the discussion later in these reasons of the licence fees specified in the Information Kits and licence application forms).
Mr Lam also gives evidence about a telephone call and text messages exchanged between him and Mr Cui following the 23 January Meeting.
It is convenient to interpose here that Mr Cui annexes copies of text messages between Mr Cui and Mr Lam on 23 and 24 January 2019. These text messages have been translated into English by a NAATI certified translator, and Mr Liu has attested to their accuracy. They are not in dispute. The text messages are as follows:
23 January Wednesday 7:39PM
[Mr Cui]:There is an information kit. Where is it? Can you send it to me? I haven’t received it yet.
23 January Wednesday 9:42PM
[Mr Lam]:Boss Cui, You can visit our to check and read
[Mr Cui]:Un, I saw it, thank you. I have some news here. We can chat when you are free.
24 January Wednesday (sic) 5:33PM
[Mr Lam]:Sorry I had a dinner appointment with clients last night so I could not chat.
Mr Lam attests that a few weeks following the 23 and 24 January 2019 text messages, sometime in February 2019 after Chinese New Year, Mr Cui phoned Mr Lam. Mr Lam’s account of the conversation is as follows:
[Mr Cui]: I cannot pay the license fee you demand but I would be happy to pay $1,500 per six months. Otherwise, we will join all of the karaoke businesses in Queensland and Melbourne and join together and sue.
[Mr Lam]:It is not my business, I will report to my boss.
[Mr Cui]:We have a very good legal team in Melbourne.
[Mr Lam]:Our price is in accordance with the K Square judgment from Sydney.
Mr Lam’s evidence and the text messages show that by late January 2019, in the face of meeting Top Plus’ representative, Mr Cui, whilst stating to the effect Yi Star was prepared to enter into negotiations for a licence, was not willing to pay the licence fee amount sought, and was not prepared to cease use of the KMVs, preferring to threaten suit.
The respondents’ evidence
Ms Zhang
Ms Zhang gives evidence about her involvement in the day to day running of the Restaurant, but denied playing any substantive part in the management and business affairs of E‑Star Karaoke. She attests that letters addressed to E-Star Karaoke were sent to 80 Scarborough Street, or alternatively the postal address of Yi Star’s accountants. As I have said above, she said that after Heeretea was established her focus was on it. I return to Ms Zhang’s evidence in my consideration of the issue of authorisation below.
Mr Cui
Mr Cui gives evidence that he has been the only person responsible for the operation of E‑Star Karaoke, initially as its manager, and from early 2018, as company director. The respondents’ case is that Mr Cui was the sole person responsible for the procurement, installation and operation of the Thunderstone system.
In Cui 3, Mr Cui said that he became aware of the Thunderstone system “from friends who were running karaoke business in China” using the Thunderstone system. Mr Cui says that he had seen the system in use overseas in karaoke venues in his home province (Jinlin City and Changchun City) as well as in Beijing and Shanghai. Mr Cui also says that at the time he was preparing to set up E-Star Karaoke he was aware of the Thunderstone system in use in Queensland and other states in Australia, including from speaking with owners of other karaoke businesses.
Inter alia, Mr Cui sets out certain steps Yi Star took and requested Mr Lv take (see below) in late 2019 and early 2020 to delete copies of KMV Films from the Thunderstone system installed at the Premises. Mr Cui gives affidavit evidence about a ‘hit rate record’, which he states recorded the number of ‘hits’ of KMVs by Yi Star and its customers (discussed further at [298]‑[303]). Mr Cui states the hit rate record was obtained from Thunderstone following the initial steps taken by Mr Lv (see below) to remove KMV Films from the installed system. As I state elsewhere in these reasons, no person from Thunderstone gave evidence in the proceeding, and there is no documentary record that objectively is identifiable as being issued by Thunderstone relating to the matter.
Whilst Mr Cui states he communicated with “Cherry” by WeChat, I am not satisfied by those claims who or what “Cherry” is, or that they were an employee of Thunderstone. Indeed, there is no evidence which satisfied me that “Cherry” is any particular person. In respect of many of the instances that Mr Cui states he had a particular communication by WeChat, he also states that he is not able to produce records of his communications by WeChat because he subsequently changed mobile phones (he does not say when he changed phones). However, there are a very few WeChat communications with “Cherry” that he did annex. I found Mr Cui a witness who was prepared to tailor his evidence to the circumstances, and not in all instances credible. The WeChat examples he tendered are anodyne. There are no WeChat records supporting key events Mr Cui claimed to have occurred. In the circumstances, where Mr Cui’s account is contradicted by an applicants’ witness, specifically, Mr Lam, or the evidence of the documentary record, I prefer that evidence, whilst where the evidence is uncorroborated, I place less weight on its reliability.
I set out the evidence of the hit rate record and its limitations below in these reasons at [298] and following.
I further expand upon Mr Cui’s evidence together with the evidence of Mr Zhao below, and in my consideration of the issues of infringement, defences, and relief.
Ms Wang
Ms Wang was responsible for causing Yi Star to be incorporated. She stated that her role was limited to providing financial support and assistance with the shop‑fitting works, including instructing town planners to secure the development approval required to allow E-Star Karaoke to operate. She denies playing any part in the management of either of the Yi Star businesses. I return to Ms Wang’s evidence in my consideration of the issue of authorisation below.
Mr Xu Zhao
Mr Xu Zhao gives evidence about the operation of the E-Star Karaoke business and various steps that were taken in 2020 in order to check whether certain KMV Films had been successfully deleted from E-Star Karaoke’s Thunderstone system. He also gives evidence about his method of dealing with mail relating to E-Star Karaoke. I return to Mr Xu Zhao’s evidence below in my consideration of the issues of notification of infringement and Yi Star’s post‑notification conduct.
Mr Yang Zhao
Mr Zhao was an independent sales agent of Thunderstone from 2016 to early 2018. In his written evidence he said his role was to promote the Thunderstone system to operators of karaoke venues.
Mr Zhao gives evidence about the Thunderstone system, which he says includes the hardware devices such as the relevant computers, routers, and memorizers (Hardware) and the operating system used by the Hardware (Software). Mr Zhao’s written evidence is that he “had full discretion in the sale of the Hardware, including drafting the Hardware sale contract and setting [the] contract price”.
Mr Zhao says that he and Thunderstone had an oral agreement that Thunderstone would deliver the Hardware to the buyer upon his order and the relevant payment being made to Thunderstone’s account. Once the Hardware order was given to Thunderstone, Mr Zhao says Thunderstone would enter into a Software license contract with the buyer. Specifically, he says:
(a)the Software license contract was to permit the Hardware buyer to use the Software;
(b)the consideration was the annual service fee determined by Thunderstone;
(c)Thunderstone would provide all necessary services including tuition, providing music works, database updating, system maintenance, and arrange copyright license.
Mr Zhao likened the process of acquiring the Thunderstone system to “when the user buys a laptop from retailer and then paying the subscription fees to software provider such as Microsoft Office 365”.
As I have adverted to above, no person from Thunderstone gave any evidence in the proceeding.
Consistent with the evidence of Mr Cui, Mr Zhao says he first dealt with Mr Cui from about June 2016 when Mr Cui approached Mr Zhao to purchase a number of VOD units “manufactured by Thunderstone”. In January 2017, the two entered a contract written in Chinese – the English translation being the Yi Star 2017 Agreement.
Mr Zhao states that during negotiations for the purchase of the Thunderstone system, Mr Cui said that he would be running his business in Australia. Mr Zhao says he told Mr Cui that “the copyright issues would be covered by Thunderstone”. In a second affidavit, Yang Zhao 2, Mr Zhao sought to clarify his evidence about this conversation to say it took place in or about July 2016 over WeChat using the voice call function. He said that in that conversation he told Mr Cui that “…Thunderstone had obtained the relevant licence for the songs and that he would be fine as long as he only used karaoke videos provided by Thunderstone” (collectively, the oral representations). The respondents rely inter alia on these oral representations in their innocent infringement defence.
In Yang Zhao 1, Mr Zhao stated that in late 2018 or early 2019, after he ceased working with Thunderstone, he “heard … that Thunderstone no longer covered the copyright and [he] told this hearsay to [Mr Cui]”. In Yang Zhao 2, Mr Zhao sought to clarify this evidence to say that the conversation occurred via WeChat (using the voice call function), and, although he was not certain, to the best of his recollection the conversation actually took place in around November 2019. In cross‑examination, Mr Tsang put the following proposition to Mr Zhao, which he accepted:
MR TSANG: Mr Zhao, do you accept that it’s possible that the year you have identified as 2019 is incorrect?
THE INTERPRETER: Sorry, I will repeat the interpretation. He said, “I did not hear well”. Okay. I think should be 2018.
Accordingly, I am satisfied that Mr Zhang told Mr Cui the above in 2018, not 2019.
It emerged in the course of the respondents’ witnesses oral evidence that the system installed at E-Star Karaoke was made up of units from a number of suppliers, not limited to Thunderstone. This impugns the reliability of Mr Zhao’s written evidence above that the system was “manufactured by Thunderstone”. The import of Mr Zhao and Mr Cui’s evidence is that Mr Zhao, not Thunderstone, supplied the components of the system acquired by Yi Star. Although it may be that Thunderstone is the supplier of the ‘Software’, whatever that may comprise, I am not prepared to speculate in the absence of documentary evidence fully detailing the system, including the operating system, applications and databases.
Mr Lv
As I have said, Mr Lv is located in China. In Lv 1, Mr Lv describes his work as “providing management and maintenance services on audio systems and internal network structure to karaoke businesses” and his services as relevantly including to assist karaoke businesses to manage their VOD operating system when needed. In Lv 2, expanding on this evidence, he attests to having worked with an authorised reseller franchisee of Thunderstone in Jilin Province before 2015, and at the dates of his affidavits working with another such entity in Jilin Province in the same role. In that role he provided after-sales support to customers including both hardware and software issues, such as installing the local database, VOD operation panel and audio system, and performing software updates and maintenance and repairs of the digital music database.
Mr Lv gives written evidence about the operation of the Thunderstone system, and various steps that he undertook remotely from Jilin Province first, in early 2019, and secondly, in late 2019/early 2020 (before Chinese New Year), to delete some of the KMV Films from the E‑Star Karaoke Thunderstone system (I return to the evidence of deletion later in these reasons).
Regarding the operation of the Thunderstone system, Mr Lv explains that the in‑house database (that is, the central server) located behind checkout counter (it is reasonable to infer this equates to behind the reception area at the Premises) downloads and stores KMVs. It can be updated automatically or manually. Mr Lv states that:
(a)an automatic update is done by the customer, or by the supplier without any operation by the karaoke operator. Either:
(i)the customer can search and download a KMV not on the database with the assistance of a smartphone. This is a built in function to many systems, including the Thunderstone system. This cannot be turned off by the karaoke operator; or
(ii)the supplier will update the database periodically. This is a process where the supplier releases the latest KMVs on to the central server. Then, all in‑house databases (i.e. at the outlet) will automatically download the new released KMVs from the central server, except for those KMVs that are blacklisted;
(b)a manual update is done by the karaoke operator searching and downloading selected songs from the central server to the in‑house database, however Mr Lv says this seldom happens because the in‑house database has already downloaded all the KMVs from the central server.
SUBSISTENCE, AND OWNERSHIP OF COPYRIGHT IN THE KMV FILMS
Position on the pleadings and further to admissions
As I have said earlier in these reasons, the respondents put in issue each of subsistence, ownership and licence of the KMV Films. In their defence they did not admit any of the allegations made in the Claim:
(a)that Universal Music had the KMV Films (in this paragraph I use the phrase UML catalogue);
(b)that the KMVs in the UML catalogue have been released in Hong Kong and Australia, further or alternatively, supplied commercially in Australia in physical VCD/DVD format or in electronic form;
(c)that the KMVs in the UML catalogue are cinematograph films within the meaning of the Copyright Act;
(d)that the KMVs in the UML catalogue were each made by qualified persons, made in and/or first published in Hong Kong (being a country referred to in reg 4(1) of the Copyright (International Protection) Regulations 1969 (Cth)), made by Universal Music, or in the alternative, made by other persons, being film production companies, at the request of Universal Music for valuable consideration pursuant to an agreement for the making of such KMVs, further or alternatively, were acquired by Universal Music from EMI Records Limited, Cinepoly Records Company Limited and Go East Entertainment Company Limited;
(e)that copyright subsists in each of the KMVs ‘contained in’ the UML catalogue (the wording in the Claim, which I construe as meaning the KMVs comprising the KMV Films);
(f)that Universal Music is the owner of the copyright in the KMVs contained in the UML catalogue;
(g)that at all material times Top Plus was the exclusive licensee of copyright subsisting in the KMVs contained in the UML catalogue in Australia and New Zealand, which exclusive licence agreements were in writing, particularised, and for the period of claimed infringement in evidence.
Notices to Admit and Notices of Dispute
Further to an exchange of a first Notice to Admit Facts dated 17 June 2020 and Notice of Dispute dated 1 July 2020, the respondents maintained their non‑admissions, and extended them to not admitting that the KMV Films include an imposed label, mark, watermark or otherwise a notice of or by Universal Music or a producer and/or film production company.
Pursuant to a second (and more extensive) Notice to Admit Facts dated 4 December 2020, and a Notice of Dispute dated 7 January 2021, relevant to these issues of subsistence, ownership and exclusive licence, the respondents substantially maintained the non‑admissions of their earlier Notice of Dispute, inter alia, in relation to ownership and exclusive licence, whilst admitting that the KMVs included in the UML catalogue (that is, the KMV Films) are cinematograph films within the meaning of s 10(1) of the Copyright Act.
The position at hearing and in submissions
On 19 April 2021, the first day of hearing, the respondents’ counsel sought leave to withdraw the 7 January 2021 admission (by not disputing the fact) that Top Plus had the exclusive right in copyright in the KMV Films, including 9 of the KMV Films of the Infringement Examples. I accepted the respondents’ solicitor’s explanation that the admission had been an administrative error, and allowed that withdrawal of admission, granting leave to the applicants to adduce further evidence on the question of Universal Music’s copyright in the KMV Films, and reserving costs.
Following service of the affidavit evidence of Mr Chan and Mr Wong, the respondents by omitting to dispute the served facts in the December 2020 Notice to Admit Facts conceded that they [that is, all of them] on the stated dates caused the respective 10 Infringement Examples to be seen and heard in public through electronic transmission to the karaoke television screen, whilst not admitting that they operate a business of hiring out rooms in its Premises (not there defined) to members of the public in order to facilitate karaoke performances. In the face of the written evidence of Mr Cui and Mr Xu Zhao these non‑admissions as to Yi Star’s business under the name E-Star Karaoke at the Premises cannot stand in respect of Yi Star and Mr Cui. At hearing the respondents’ counsel did not contend otherwise.
In the respondents’ written opening submissions, the extent of submissions in relation to subsistence and ownership of copyright in the KMV Films was the following, at [6]: “Even [if] it is established that Universal [Music] was the owner of copyright which subsisted in the relevant KMVs, it is submitted that the applicants’ case must fail …” (as I have recorded above at [11], the respondents submit the case must fail on the construction of the Licence Agreements and for want of evidence).
On the questions of copyright ownership and licence the respondents’ primary focus in their closing submissions is on their construction of the Licence Agreements. As to ownership of the KMV Films, the respondents submit that it is a question of fact whether Universal Music was the owner of the whole catalogue such that it could grant an exclusive licence to Top Plus (by ‘whole catalogue’ I understand counsel to mean the 6,214 KMV Films).
Copyright and ownership of the 10 KMV Films corresponding to the Infringement Examples
In respect of the 10 KMV Films corresponding to the Infringement Examples, in their closing submissions, as well as the UML code, song title (in Chinese characters or English, and where applicable ‘English Pinyin’), and artist, the applicants identify the countries in which each KMV Film was first published (8 in Hong Kong and 2 in Taiwan) and the year (2008, 2010, 2011, 2012, 2013 and 2014), the relevant confirmatory written assignment in the evidence, and the ‘watermarks’ in each of the KMV Films (that is, by time stamp or ‘pinpoint’ reference identifying where the Universal Music name and logo appears on the KMV, although I note that for a number of the KMV Films, the name and logo are displayed several times during the KMV Films in evidence, and not only at the point in time identified). The applicants identify and rely on the statutory presumptions in ss 90(3) (in conjunction with reg 4(1) of the Regulations), 98(2), 98(3) and 131(1) of the Copyright Act.
The respondents in their written closing submissions concede that the applicants establish copyright in those 10 KMV Films, saying, at [156] “The respondents do not take issue with any of the above. It is clearly an appropriate way to prove Universal [Music’s] ownership of copyright in [those KMV Films]”.
I am satisfied on the evidence summarised above of Mr Duncan Wong and Ms Tong, and apart from the respondents’ concession, that the applicants have established that copyright subsists in those 10 KMV Films, and is owned by Universal Music. Further, I am satisfied on the evidence of those confirmatory assignments that Universal Music has the rights to sue in respect of infringements of copyright in the 10 KMV Films occurring prior to the date of the respective confirmatory assignment.
Given the depiction of Universal Music’s name and the UML Logo on each of those 10 KMV Films, I am satisfied that the presumptions contained in s 131(1) of the Copyright Act apply.
Subsistence and ownership in the balance of the KMV Films
The respondents submit that the applicants have not identified the primary facts required to prove Universal [Music’s] copyright in the balance of the KMV Films – that is, in respect of each and every one of the 6,204 other KMV Films. They say that the applicants were on notice that the respondents required the evidentiary deficiency to be remedied (although they rely on affidavit evidence from their solicitor not read or tendered at hearing).
I am satisfied on the evidence of Mr Duncan Wong (including that Universal Music was formerly known as PolyGram Records Limited until 23 April 1999), the evidence of the Spreadsheet, Ms Tong’s evidence, the written assignments from EMI, Cinepoly and Go East I identify above at [87], and the Confidential Paragraphs, that Universal Music is the owner of the relevant copyright in the KMV Films.
I am satisfied further that the written assignments establish that Universal Music is the owner of the intellectual property rights, including copyright in the works and subject matter other than works, formerly owned by each of EMI, Cinepoly, and Go East. I am further satisfied by the identification of the logo of the respective KMV Films in the Spreadsheet as being variously EMI, Go East and Cinepoly that those KMV Films owned by Universal Music by reason of the above assignments include each KMV Film listed in the Spreadsheet as having its first publication date prior to or at the date of the respective assignments. As the EMI, Cinepoly, and Go East labels were among the rights assigned to Universal Music, it follows that any KMV Film identified in the Spreadsheet as having a logo of one of the above labels that was first published after the date of the assignment is also owned by Universal Music.
On the evidence of Mr Duncan Wong as to the maintenance of the database of KMV Films, and the generation of the Spreadsheet, and the evidence of Ms Tong (see at [81]‑[86]), I consider that in the circumstances of this case it is reasonable to infer, and I infer, from the Spreadsheet that the provisions of s 131(1) of the Copyright Act are satisfied in respect of the KMV Films.
Summary of findings on subsistence & ownership of KMV Films
In sum, it follows from the above that I am satisfied on the evidence that Universal Music has at all material times been the owner of copyright subsisting in the 10 original KMV Films of the Infringement Examples pursuant to s 98(3), or alternatively, s 98(2) of the Copyright Act as the entity responsible for bringing those KMV Films into existence, and of the remainder of the KMVs comprising the KMV Films on the same basis, as the entity responsible for bringing the KMV Films into existence, or to the extent applicable, by assignment from third parties, and specifically, where the label identified in the Spreadsheet is that of EMI, Cinepoly, or Go East, by assignment from those entities.
EXCLUSIVE LICENCE
The Licence Agreements
Relevant principles
The principles relevant to construing terms in written contracts are not in dispute. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 the plurality of French CJ, Hayne, Crennan and Kiefel JJ (as the Chief Justice then was) stated at [35]:
… this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd [[2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".
To the same effect, see Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514; [2019] HCA 13, per Kiefel CJ, Gageler, Nettle and Gordon JJ at [44].
The above passage from Woodside reaffirming the objective approach to be adopted in determining the rights and liabilities of parties to a contract has been referred to with approval by the Courts, including by the Full Court of the Federal Court of Australia in Sandoz Pty Ltd v Lundbeck A/S (2020) 384 ALR 35; (2020) 153 IPR 380; [2020] FCAFC 133 at [48] (per Nicholas, Yates and Beach JJ) (their Honours were overturned by the High Court on appeal, but not disturbing their Honours’ acceptance of the principles explained in Woodside: Lundbeck A/S v Sandoz Pty Ltd (2022) 399 ALR 184; (2022) 165 IPR 411; [2022] HCA 4 per Kiefel CJ, Gageler, Steward and Gleeson JJ at [51]‑[60]; Edelman J at [104]).
The Licence Agreement – relevant provisions
I have briefly referred to the Universal Music and Top Plus Licence Agreements above at [63]. The Licence Agreement dated 1 January 2017 (2017 Licence Agreement), and the Licence Agreement dated 1 January 2019 (2019 Licence Agreement) are in the same terms, save for the relevant term for which they are on foot (in each case a 24 month term), and save that the 2019 Licence Agreement in section 10A (as each agreement describes its clauses) also refers to the 2017 Licence Agreement, whilst the 2017 Licence Agreement, self‑evidently, does not.
Section (that is, clause) 10A of each agreement extends the current agreement to vary the terms of previous licence agreements made by the applicants and to apply clauses 8 and 10 of the current agreement to the licence agreements entered into by the applicants dated 10th March 2006, 2nd August 2007, 1st January 2009, 1st January 2011, 1st January 2013 and 1st January 2015 (each of which is also listed in clause 10A in the 2017 Licence Agreement). In clause 10A in the 2019 Licence Agreement the 2017 Licence Agreement is added to the listed previous licence agreements. These references to previous licence agreements are confirmatory of the affidavit evidence of Mr Duncan Wong, Ms Tong, and Mr Chan that Universal Music and Top Plus had entered into and conducted the applicants’ relationship under licence agreements for the KMV Films (as then owned or controlled by Universal Music) since 2006.
Each of the 2017 Licence Agreement and the 2019 Licence Agreement is signed by Mr Duncan Wong and Mr Chan as authorised representative of Universal Music and Top Plus respectively, and as managing directors of the relevant applicant. Financial information claimed confidential to the applicants has been redacted from the copies of the Agreements in evidence, namely the licence fee and master copy charges referred to as being set out in Schedule (B) in each Agreement.
As the Agreements are in the same terms, I refer to the terms and consider the parties’ arguments by reference to the 2017 Licence Agreement.
After first stating that the 2017 Licence Agreement is dated 1st January 2017, defining that date as the “Effective Date”, and naming the applicants as the parties to the Agreement (Universal Music is defined as the “Record Company”, whilst Top Plus is not defined but is thereafter referred to interchangeably as “TOP” or “Top”), the recitals state as follows (emphasis added):
WHEREAS:
TOP intends to establish a comprehensive licensing system in the Territory (as defined below) for coordinating the karaoke networks and/or distributing karaoke version of music videos in the Territory (as defined below) throughout the authorized Outlets (as defined below) therein.
Top thereby desires to enter into an agreement with the Record Company pursuant to which the Record Company shall grant to Top an exclusive license to use all karaoke version of the music videos as owned and/or controlled by the Record Company as specified in "SCHEDULE (A)" only at the authorized Outlets in the Territory and to collect relevant payments from those Outlets on the terms and conditions of this Agreement.
Whilst the applicants’ primary position is that this is not an appropriate case in which to apply the user principle, they submit that even if the user principle were to apply, the same measure of damages would follow.
In their opening submissions, the respondents characterise the applicants’ claim for s 115(2) damages as being based on a reasonable licence fee, and submit that “The ‘reasonable licence fee’ approach (also known as ‘the user principle’) is inappropriate” because Yi Star will establish that “… it would not have used the KMVs (the licence fee sought by Top Plus being far too expensive) in question and would not have entered into any licence with Top Plus.”
In closing submissions, the respondents submit that the lost licence fee approach is incorrect on the facts of this case, compensatory damages, if any, should be assessed either on the basis of a ‘reasonable fee’ for a notional licence – applying the user principle – or otherwise on the basis that damages are at large, and either approach will lead to a similar result. They submit that regardless of which approach is taken, damages must be assessed limited to the actual use of the 10 KMV Films of the 10 Infringement Examples only. They submit it is not correct to assess damages based on the licence fee for the UML catalogue. Further, it is necessary to consider how many rooms Yi Star had available which used a karaoke system in which songs in Top Plus catalogue [KMV Films] were available. They submit that the respondents’ evidence (Messrs Cui and Xu Zhao, see above at [308] and [310]) should be accepted.
In sum, the respondents say, if presented with a choice whether to pay Top Plus’ quoted licence fee or not to use the KMV Films, Yi Star would not have used the KMV Films, therefore the lost licence fee approach is incorrect. The respondents further submit that Top Plus’ evidence of licences granted (as distinct from the published rates) was sparse, no licence that had been granted was proved to be “comparable”, therefore there was no “normal or established” royalty. As the Infringement Examples prove infringement of a very small fraction of the UML catalogue (10 KMV Films), and infringement of every KMV Film was not proved, and therefore a licence fee at the catalogue licence amount was wrong, at most compensatory damages must be limited to those 10 instances. They refer to a number of English cases, none of which the respondents identify was concerned with similar subject matter to the KMV Films, all of which appear to fall within a hypothetical licence fee/approach, and which cases they urge should be preferred over decisions in the Court, including Escape Bar and Phonographic Performance Company of Australia Ltd & Ors v Hairy Little Sista Pty Ltd & Anor [2018] FCCA 2794 (which were concerned with musical works and sound recordings, catalogue/repertoire or tariff/licence fees). Even if the lost licence fee approach is adopted, it is appropriate to apply a discount, as Top Plus offered discounts on payments of its licence fees.
In reply the applicants submit that the respondents’ analytical pathway is self‑serving: it takes as its starting point the end‑point of the infringer’s asserted refusal to pay, and then makes that refusal the basis for the inapplicability of the lost licence fee approach. Nothing in the authorities discussed above establishes that approach. Lord Wilberforce’s discussion of group (2) makes clear that it does not follow that an infringer’s failure or refusal to pay the published royalty/licence fee renders inapplicable the lost licence fee approach. The respondents place reliance on Autodesk (discussed above) and, the decision of Perram J in Halal Certification Authority Pty Ltd v Scadilone Pty Ltd (2014) 107 IPR 23; [2014] FCA 614 and in Dallas Buyers Club LLC v iiNet Ltd (No 4) (2015) 327 ALR 670; (2015) 112 IPR 1; [2015] FCA 317 . The facts of those discussions are far removed from the present case. In Halal the respondent restaurants were serving meat certified by the wholesaler as halal, the restaurants themselves had no interest in being certified as halal retailers. The basis on which damages was sought was the charge for certifying the restaurants as halal, not the same thing. So too, the claims in Dallas Buyers Club and Perram J’s discussion and conclusions make clear that that case is far removed from the present.
(c) Top Plus’ licensing regime and licence fees
Top Plus set out its licence fees in the Information Kits and in the licence application forms published and distributed in each of 2017, 2018 and 2019 under cover of the letters Mr Chan sent to karaoke outlets in Australia, including in the 9 notification letters sent to Yi Star. That licence fee was for a non‑exclusive licence in the whole of the UML catalogue for the calendar year, payable on a per room basis. The licence application form also expressed the licence fee on a per month basis. The licence entitled the licensee to use the copyright in the KMV Films – in the whole of the UML catalogue.
The licence fee quoted in the Information Kit was a fee excluding GST, and that quoted in the licence application form was a fee including GST. The licence fees are otherwise the same. The following are Top Plus’ quoted licence fees for the years 2017 to 2019 inclusive set out in its standard licence application forms (including GST), and Information Kits (excluding GST) for those years (as mailed to karaoke venue operators including Yi Star), together with the equivalent fee on a monthly basis:
Year
Annual licence fee (per room)
Monthly licence fee (per room)
(incl GST)
(excl GST)
(incl GST)
(excl GST)
2017
$2,860.00
$2,600.00
$238.33
$216.67
2018
$2,970.00
$2,700.00
$247.50
$225.00
2019
$3,080.00
$2,800.00
$256.67
$233.33
Payment of the above standard annual licence fee for the relevant year, or part thereof, entitles the karaoke venue to use (in practice to authorise its customers to use – variously access, download, play and perform) the KMV Films, and each KMV Film, however many times they choose (as the venue determines), limited only by the number of rooms the venue has identified it makes a VOD system available for its customers and has obtained a licence. That is, whether the customer plays one KMV Film, or 6,214 KMV Films, or any number in between, and whether they play it once or many times, the licence fee is the same; it is determined only by the number of licensed rooms in which the venue makes available a VOD system to its customers.
Top Plus’ licence application form provides for a range of discounts from the annual licence fee depending on the time and frequency of the payment or instalment, ranging from 20% discount if the fee is paid annually in advance, to 10% discount if paid half yearly in advance by 2 equal payments, to no discount if paid by 12 equal instalments each month in advance. Top Plus submits that as YI Star did not enter into a licence, and Mr Cui refused to do so when presented with the opportunity by Mr Lam, none of the discounts apply. The respondents submit to the contrary.
Mr Chan said that Top Plus had 2 licence agreements with karaoke venue operators in 2020 and 2021. In cross‑examination, he stated that he was unable to recall the number of licence agreements Top Plus had in 2019 without looking at his records. When pressed as to the number of licences Top Plus had granted over the history of its business. Mr Chan said that the number of licences granted over the time would be 15 to 30 licences.
In mid 2020 Top Plus licensed a Queensland karaoke venue operator Game Republic Pty Ltd pursuant to a completed licence application form at an annual licence fee of $2,900.00 plus GST per room, for 5 rooms (Game Republic Licence). This rate is higher than the previous years’ fees, but in line with a $100.00 annual incremental increase over the 2017‑2019 period.
Also in evidence are 3 licence agreements entered into for the years 2017, 2018 and 2019. In cross‑examination Mr Chan explained were entered into as part of a settlement and included some discounts.
Both parties urged me to put these 3 licences to the side, as evidencing a settlement, and not a freely‑entered into royalty or ‘reasonable licence fee’ situation.
(d) Consideration
I am satisfied on the evidence that Top Plus, is, and was at all relevant times, in the business of licensing the copyright in the KMV Films to karaoke venues; and had a normal and established licensing regime that it published and distributed to karaoke venues evidenced by the Information Kits, and licence application forms. I am also satisfied by the Game Republic licence, and Mr Chan’s evidence that Top Plus had entered into between 15‑30 licences over time; that the licence fee structure and amounts evidenced are not simply ‘any fancy sum’ (c.f. Sargent J quoted by Lord Wilberforce in General Tire, see above at [340]). I am also satisfied on the evidence that Top Plus licensed its rights in the KMV Films on a per room basis at an annual fee, or, where the period of operation of the licensee commenced during a calendar year, on a monthly basis. Whilst Top Plus did discount its fee, that discount was given in instances of payment considerably in advance (annual, six monthly, or quarterly). Those are not the circumstances that apply to this case.
In the circumstances of this case, I am satisfied that compensatory damages under s 115(2) of the Copyright Act should be awarded on the basis of Top Plus’ annual licence fees as set out in the above table. By the Infringement Examples Top Plus has established infringement of its exclusive rights. It lost its licence fees for the KMV Films for the Infringement Period, for the number of rooms I have found Yi Star made available in that Period.
I reject the respondents submission that Yi Star would not have paid the Top Plus licence fee, and that the UML catalogue licence fee is not the appropriate measure. The evidence establishes that Yi Star and Mr Cui were prepared to, and did, enter into arrangements to use KMVs on an exceedingly broad ‘repertoire’ or ‘catalogue’ basis with Thunderstone/Mr Zhao in China by reference only to the number of access points, and again for the whole catalogue by reference to licensed venue size (number of customers) with the OneMusic licence. That is, in their dealings with Mr Zhao and with APRA Yi Star and Mr Cui accepted catalogue and venue size licences as the bases for Yi Star’s commercial activities. This is not a case of a once only, inadvertent, use of a single KMV Film.
Mr Cui’s offer, in exchanges with Mr Lam in January‑February 2019 to pay $3000 was made in the context of threats to sue and countersue. In those circumstances it is not a useful guide.
Whilst I consider that the lost licence fee approach is appropriate in the present case, for the above reasons I am also satisfied on the evidence that the reasonable licence fee approach under the user principle discussed in Winnebago and Universal leads to the same result.
(e) Quantum of lost licence fee
Accordingly I calculate s 115(2) Copyright Act damages for the period of infringement by reference to the licence fees quoted, the months and number of available rooms on a GST inclusive basis as follows:
Period Licence fee (per room, per year) (incl. GST) No. of rooms Licence fee payable August to December 2017 (5 months) $2,860.00 7 $8,341.67* January to December 2018 $2,970.00 19 $56,430.00 January to October 2019 (10 months) $3,080.00 19 $48,766.67** Total (incl. GST) $113,538.34 * In the above table, I award damages for the 2017 year for the 5 months falling in the Infringement Period, calculated by reference to the per room annual licence fee for the 2017 year multiplied by 7 rooms: thus, ($2,860 x 7) x (5/12) = $8,341.67.
** In the above table, I award damages for the 2019 year for 10 months falling in the Infringement Period, calculated by reference to the per room annual licence fee for the 2019 year multiplied by 19 rooms to the end of the Infringement Period on 31 October 2019): thus, ($3,080 x 19) x (10/12) = $48,766.67.
Accordingly, by way of compensatory damages under s 115(2) of the Copyright Act I award the sum of $113,538.34, that amount to be payable by the first and third respondents jointly and severally to Top Plus.
The applicants seek interest pursuant to s 76 of the Federal Circuit Court of Australia Act 1999 (Cth) , now see s 211 of the FCFCOA Act. Interest on the sum awarded pursuant to s 115(2) Copyright Act may be awarded. Interest does not accrue on any additional damages that may be awarded under s 115(4) Copyright Act. The applicants submitted that if damages are awarded, the parties should be given an opportunity, within 14 days of delivery of these reasons, to confer with a view to reaching agreement on the amount of interest payable under s 211 of the FCFCOA Act. I will give the parties an opportunity to confer.
Additional damages – s 115(4), Copyright Act
Section 115(4) of the Copyright Act provides:
(4)Where, in an action under this section:
(a) an infringement of copyright is established; and
(b) the court is satisfied that it is proper to do so, having regard to:
(i)the flagrancy of the infringement; and
(ia)the need to deter similar infringements of copyright; and
(ib)the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and
(ii)whether the infringement involved the conversion of a work or other subject‑matter from hardcopy or analog form into a digital or other electronic machine‑readable form; and
(iii)any benefit shown to have accrued to the defendant by reason of the infringement; and
(iv)all other relevant matters;
the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.
The applicants seek additional damages pursuant to s 115(4) of the Copyright Act in the sum of between $150,000 and $200,000 be paid to Top Plus by the respondents.
The award of additional damages is discretionary. In order to receive an award of additional damages under s 115(4) of the Copyright Act, a party must first obtain damages under s 115(2) of the Copyright Act. I have awarded s 115(2) damages against the first and third respondents.
I set out the relevant principles in Microsoft at [717]‑[721] as follows (correcting a typographical error in [718]):
[717]The principles related to additional damages are set out in many cases in the Federal Court and relied on and applied intellectual property proceedings in this Court, inter alia, by me in Henley Arch v Del Monaco [2019] FCCA 3848 at [102]‑[105]. I have found useful the discussion of such damages in the decision of Bromwich J (and the decisions to which he refers) in Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) [2017] 122 IPR 279 at [74].
[718]In sum, the following principles may be summarised from the authorities. First, it is not necessary that any amount of additional damages be proportionate to any award of compensatory damages. Secondly, an award of additional damages involves an element of penalty. Thirdly, part of the [function] of an award of additional damages is to mark the Court’s disapproval or opprobrium of the infringing conduct. Fourthly, the matters set out in sub-s 115(4)(b) of the Copyright Act are not preconditions to an award of such damages. Fifthly, conduct that may properly be seen as flagrant (per s 115(4)(b), Copyright Act) includes conduct which involves a deliberate and calculated infringement, a calculated disregard of an applicant’s rights, or a cynical pursuit of benefit.
[719] In Henley Arch I noted at [104] to [105]:
[104] Perram J in Halal Certification Authority v Scadilone Pty Limited [2014] FCA 614; (2014) 107 IPR 23, observed that if additional damages are appropriate, the amount of damages to be awarded must operate as a sufficient deterrent to ensure that the conduct will not occur again. It should also be noted that, whilst additional damages encompass, they are not the same as aggravated or exemplary damages at common law. Further, as Bromwich J in Geneva observed, at [80] (referring to Truong), specific deterrence has a role to play, including general deterrence.
[105] It is not always the case, however, that additional damages must be given, nor that they be such as to be given in an award and an amount as claimed by an applicant. I adopt what Bromwich J said in Geneva at [82]:
[82] Additional damages may be seen as encompassing broad concepts not always readily amenable to precise measurement or quantification. This includes having regard to capturing aspects of loss that have not been able to be ascertained because of the imperfect nature of litigation and evidence gathering in reflecting all aspects of wrongdoing and the total damaging effect of infringing or contravening conduct. It also entails giving a dollar figure to otherwise intangible considerations of punishment, giving effect to judicial disapproval and sanction and future-looking considerations of specific and general deterrence.
His Honour continued at [83]:
[83] …it might be said that it is important to make sure that it is seen to be simply “not worth the candle” for anyone else to engage in such conduct in the future…
[720] A key consideration when deciding to exercise the discretion afforded to the Court under s 115(4) of the Copyright Act is whether the infringement was flagrant (see above, fifth noted principle). As noted by Beach J in Henley Arch Pty Ltd v Lucky Homes Pty Ltd [2016] FCA 1217; 120 IPR 137 at [244] (citations omitted):
[244] …in this context flagrancy means more than copying. It also means more than mere mistakes or carelessness. It connotes reprehensible conduct or scandalous conduct which may be demonstrated by deliberate and calculated acts of infringement. But it is not necessary to demonstrate a consciousness of copyright infringement. A consciousness of wrongdoing may be sufficient.
[721]In Truong Giang Corporation v Quach [2015] FCA 1097; (2015) 114 IPR 498, discussing the relevant principles in the trade mark context, applicable also to the copyright context, per s 115(4)(b)(ib), Copyright Act) Wigney J said at [138]-[139]:
[138] Sixth, post-infringement conduct within s 126(2)(c) of the [Trade Mark Act 1995 (Cth) (TM Act)] is unlikely to include the respondent’s conduct of the infringement proceedings. Such conduct is more relevant to the appropriate order as to costs. That said, it is difficult to see why some aspects of the conduct, by a respondent, in defence of infringement proceedings, might not be relevant to the award of additional damages. Conduct of the proceedings which involved high-handedness, dishonesty, recalcitrance, or flagrant disregard of, or deficiencies in compliance with, discovery orders or notices to produce, might, at the very least, suggest a greater need for an award of additional damages that would deter future infringing conduct by the respondent.
[139]Seventh, an award of additional damages can encompass damages which, at common law, would be aggravated or exemplary damages. The matters specified in s 126(2) of the TM Act are of a kind which are taken into account in determining whether a party is entitled to aggravated or exemplary damages at common law, but in the end result the damages to be awarded are not aggravated or exemplary damages, but additional damages, being of a type sui generis.
In sum, referring to the factors listed in s 115(4)(b) of the Copyright Act, the applicants submit that additional damages should be awarded because of the flagrancy of the respondents’ conduct, including conduct after notice, the benefit accrued by the respondents, having regard to their non‑compliance with a notice to produce and Mr Cui’s responses in that regard, for specific and general deterrence, and having regard to previous awards of additional damages in other cases. As to the last matter, the applicants accept that the amount awarded in any particular case is uniquely a matter for the Court, and that it may (or may not) award what it considers appropriate. By way of example, the applicants identify amounts of additional damages awarded in a number of previous decisions given in this Court, and in the Federal Court. Each of those decisions turns on its facts. While they may provide a guide, they are arrived at in the particular circumstances operating in each case.
The respondents submit that no substantial award of additional damages should be made.
For the following reasons, guided by the above explication of principles, and by the matters set out in s 115(4)(b), I am satisfied that it is proper in the exercise of my discretion, and appropriate in the circumstances, to award additional damages against the first and third respondents. Accordingly, pursuant to s 115(4) of the Copyright Act, I award an amount of $60,000.00 by way of additional damages, such amount to be paid by the first and third respondents jointly and severally to Top Plus.
Flagrancy and conduct after notice
The applicants submit that the respondents’ approach can be fairly characterised as one of contumelious disregard for the applicants’ rights throughout the Infringement Period. The respondents disregard after notice commenced with their failure to respond to, and take action to remedy the infringement brought to their attention, upon receipt of the first notification letter dated 1 September 2017, and continued by ignoring the written invitations, notifications and reminders communicated in a further 6 notification letters sent by Top Plus. The first notification letter (1 September 2017 Letter) enclosed a licence application form, invited Yi Star to enter into a licence agreement, and offered a once‑off discount of 5 per cent. The following 6 notification letters (starting from letter dated 28 September 2017, and thence to the sixth letter dated 3 January 2019), repeated the invitation to enter into a licence agreement and further contained explicit warnings of copyright infringement.
It was only when Top Plus’ solicitors Thomson Geer sent a formal letter of demand on about 14 January 2019 with explicit threats of infringement proceedings, that Mr Cui responded, and even then his response was one of disrespect to the rights holder (the Thomson Geer letter and part of Mr Cui’s response is referred to at [319] above, see also below). Mr Cui’s response to the Thomson Geer letter was to dispute the Top Plus licence fee, and continue to offer to E‑Star Karaoke customers access to the Thunderstone system and to copies of KMV Films.
In response, the respondents rely on their evidence in support of their s 115(3) defence. They say there has not been any serious suggestion that Mr Cui deliberately caused any copyright infringement. They submit that even if the Court finds that Yi Star received the notification letters, as I have found, that finding does not affect Mr Cui’s genuine, albeit wrongly held, belief; the natural inference is that Mr Cui did not action those letters because he believed that Yi Star already had a licence. The respondents say this may be inferred by Mr Cui’s assertion in his 19 January 2019 email response to the Thomson Geer letter that “we do pay the license fee to our supplier (beijing thunderstone technology ltd)”.
I have found that Yi Star was put on notice of Top Plus’ rights from about early September 2017 by the 1 September 2017 Letter. Yi Star was reminded of Top Plus’ rights, and again put on notice of the need to be licensed by the rights holder in Australia, on at least 6 further occasions in the period to January 2019 by the 6 further notification letters referred to above. These notification letters were each ignored.
Whilst, as I observed in Hairy Little Sista, it may be that the respondents “put their heads in the sand”, their continued failure to respond until receipt of the Thomson Geer letter – a lawyer’s express demand and threat of legal proceedings – and their lack of inquiry of the supplier in China demonstrates an active disregard of the Australian copyright holders’ rights, and an adamant refusal to countenance that the arrangements Mr Cui made when acquiring the Thunderstone system in China may be insufficient, or to investigate them.
Yi Star’s conduct after notice (and subsequent response to the Thomson Geer letter) is also to be considered in the context of the WeChat voicecall in late 2018 (see [135]) in which Mr Zhao told Mr Cui that since the middle of 2018 Thunderstone did not cover the copyright in the KMVs on the Thunderstone system. There is no evidence that Yi Star or Mr Cui then or in response to the notification letters ever contacted Thunderstone about the licensing of copyright in KMVs for use in Australia. Notwithstanding that the above mentioned notice from Mr Zhao put Mr Cui and Yi Star on notice that E‑Star Karaoke did not have any Thunderstone licence, they did not engage with Top Plus’ invitations to obtain a licence.
Mr Lam’s unchallenged evidence is that at the 23 January Meeting with Mr Cui, Mr Cui said to the effect “I know that we are infringing, but the reason is because your price of licence fee is too high and so you are forcing us to do this”.
The applicants say that Mr Cui also demonstrated a dismissive attitude to the evidence that was being put against him, for example in separate exchanges between Mr Tsang and Mr Cui in cross‑examination:
(a)first the exchange:
Have you read the affidavits of Mr Christopher Chan from Top Plus?‑‑‑No.
You haven’t? Okay?‑‑‑No.
And have you read the affidavits given by Mr Lam, Louis Lam, of Top Plus?‑‑‑I did look at – I did look at but I didn’t look closely about his affidavit. But Mr Lam, Louis, yes, I did look – I did look, yes.
So you looked at Mr Louis’ – Mr Lam’s affidavits but you didn’t look at Mr Chan’s affidavits?‑‑‑I didn’t look because I don’t know this person.
But, Mr Cui, Mr Chan’s affidavit is the evidence which is being put against you to sue you personally; do you understand that?‑‑‑Yes.
The applicants say this exchange speaks volumes about Mr Cui’s attitude towards the rights of third party copyright holders and exclusive licensees; and
(b)secondly, in relation to KMVs available on the Thunderstone system, after Mr Cui had corrected the date of the hit rate record, when it was pointed out to him that the record indicated that one of the Infringement Examples remained in the system and played 16 times, the exchange:
MR TSANG: Thank you. Mr Cui, you see we looked at this one before, row 4075?‑‑‑Yes.
It’s the KMV?‑‑‑Yes.
Zhi Gen You Le by Zhan Tzu Yu
Yes?‑‑‑Yes.
And it has been played 16 times?‑‑‑Yes.
And given the evidence that you’ve just given correcting us, that means it’s still on your system as at December 2020. Isn’t that correct?‑‑‑2020. Yeah. But I also explained, it’s different version. Different version. One song has a different version of the video. So the video from – the version from Top Plus – Top Plus which is ..... has been deleted and the – the rest of stuff is not – not belong Top Plus. Because it’s different video. You want to claim the video copyright, music video. So this one, even the name is not, but the video is not. Because the lyrics are, like, live, live edition video or different company videos. It’s not just all belong to Top Plus, I think, you know it.
The applicants say Mr Cui’s response was brazen and demonstrates a contumelious disregard for the applicants’ rights: he gave the above the response without hesitation and without asking for the opportunity to check whether the KMV was one of the Infringement Examples or not.
In Cui 2 (affirmed shortly before the hearing) Mr Cui posited that “… Even if there is an identifiable watermark [on a KMV], those production companies are usually not registered in Australia and it is impossible to find who is the exclusive licence holder in Australia. I did not know (and still do not know) any way of trying to find out who is the exclusive licence holder” of the karaoke videos in the Thunderstone system.
I found Mr Cui a witness who was prepared to tailor his evidence to the circumstances, and not in all instances credible (see at [124]). The above instances further exemplify this behaviour.
Finally, I consider that the steps that Yi Star and Mr Cui ultimately took in engaging Mr Lv, and checking his work belated and incomplete.
Having regard to the principles I discuss above, Yi Star and Mr Cui’s infringements were flagrant within the meaning of s 115(4)(b)(i). On the evidence taken as a whole I am satisfied that Yi Star and Mr Cui’s conduct (including their failures to act) demonstrate a calculated disregard of Top Plus’ rights, a deliberate and obdurate refusal to acknowledge any wrongdoing, and to cease infringement which continued after notice.
Benefit accrued
The applicants submit that Yi Star avoided the payment of Top Plus’ licence fees, which in itself is evidence of an accrued benefit. They point to the hit rate record as also showing, anecdotally, that E-Star Karaoke customers, and thus Yi Star, obtained additional benefit by the infringement and continued infringement. I accept that these are benefits to Yi Star, and I take them into account.
Specific and general deterrence
The applicants submit, and I accept, that there is a need to deter similar infringements, both specifically in relation to Yi Star, and as a matter of general deterrence in relation to other karaoke outlets.
In relation to specific deterrence, I am satisfied that Mr Lv’s evidence that the blacklisting process on the Thunderstone system can be reversed calls for specific deterrence by an award of additional damages, in addition to the injunctive relief I order.
In relation to the need for general deterrence, I am satisfied that general deterrence should be reflected in the award of additional damages in this case. I consider the need to express general deterrence by additional damages arises from Mr Chan’s evidence that he has sent notification letters to about 100 outlets 3 times per year for several years (at a minimum), and Mr Cui’s evidence that he spoke to and discussed the proceeding with a number of other karaoke outlets in Queensland and other parts of Australia, kept in touch with them, and admitted meeting with other karaoke outlets before saying to Mr Lam that they would band together and form a joint party against Top Plus to counter the applicants’ suit.
The award of additional damages is a message that the Court give to persons generally – including other karaoke outlets, and similar venues, and to suppliers and representatives dealing in VOD systems and KMVs – that it is a breach of copyright not to have a licence from the copyright owner or its exclusive licensee of the rights in cinematograph films being karaoke music videos that those persons control, and that the Court by its award expresses its disapproval of the behaviour of those who disregard such rights.
Alleged Non‑compliance with notice to produce
The applicants submit that the respondents have failed to comply with a notice to produce dated 23 March 2021, and that Mr Cui’s evidence on the subject matter of the notice to produce establishes a further basis on which the Court ought to award a considerable sum by way of additional damages. I am not persuaded, however, that the conflicting accounts and various explanations given by Mr Cui, and on instructions by his solicitors, and by Mr Zhao in cross‑examination to which the applicants refer rise as high as the applicants submit.
By letter dated 23 March 2021, Thomson Geer served on the respondents’ solicitors a notice to produce requesting production of ‘the ‘Thunderstone VOD On‑Demand System Purchase Agreement’ signed between Zhuoyi Cui (Yi Star Pty Ltd) and Beijing Thunderstone Technology Ltd on 6 June 2016’, that is, the 6 June 2016 Agreement identified in recital 1 of the Yi Star 2017 Agreement. A follow‑up request was made on 31 March 2021. On the same date the respondents provided the following response:
As we are instructed, there was no such written agreement entered. But the Third Respondents [Mr Cui] had entered an oral agreement on behalf of the First Respondents [Yi Star] with Mr Yang Zhao, the sales agent of Thunderstone, for the purchase of Thunderstone System Equipments as mentioned in the Affidavit of Yang Zhao.
Based on the oral agreement, Thunderstone delivered relevant hardware to the First Respondent and the Licence Agreement were entered subsequently.
As I have said above at [264], Mr Cui and Mr Zhao differed in their accounts as to the existence of a 6 June 2016 Agreement. Whilst reflecting adversely on their credit, and in particular, on Mr Cui’s credit, I am not persuaded that the various explanations and changes of explanation constitute a failure on the part of the respondents to comply with discovery obligations so as to be reflected in an award of additional damages.
DISPOSITION
I have concluded that the applicants have established their claim against the first and the third respondents, and that those respondents defence under s 115(3) of the Copyright Act fails. I have concluded that the applicants claim against the second and fourth respondents fails. For the reasons I have set out above, I have concluded that it is appropriate to make a declaration, order permanent injunctions, and make other orders, and to award damages pursuant to s 115(2), and additional damages pursuant to s 115(4) of the Copyright Act.
The applicants wish to be heard separately on the issue of costs. I presume that the respondents wish similarly. As I have observed above, I will give the parties a period of 14 days from today or such other period as they jointly request in which to confer with a view to reaching agreement on the amount of any interest payable under s 211 of the FCFCOA Act.
I will make the declarations, orders and awards I have described above today. I will stand over the proceeding over to a date to be fixed after consultation with the parties, for the making of orders for interest and any other orders, if agreed, and otherwise to set a timetable for submissions and argument on costs, and interest if agreement is not reached.
I so order.
I certify that the preceding four hundred and two (402) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Baird. Associate:
Dated: 23 March 2023
ANNEXURE A
Table 1
Second Applicants’ Cinematograph Film Yi Star: Infringement Dates UML Code
Song Title (‘English Pinyin’)
Song Title (‘Original’)
Artist
Date performed & communicated to public
1 9204151 Wen Hao 問好 Agajiang Hai Jia 23 December 2017;
19 December 2018;
9 October 2019
2 9204154 Everyone Everyone MR. 19 December 2018;
9 October 2019
3 9204161 Hei Se Kuan Mi 黑色狂谜 MR. 23 December 2017;
19 December 2018
9 October 2019
4 9204168 Zuo Tian 昨天 MR. 19 December 2018;
9 October 2019
5 9204200 Different Man Different Man Wu Jian Hao 23 December 2017;
19 December 2018;
9 October 2019
6 9204234 Shi Jian You Lei 時間有淚 Zhang Xue You 23 December 2017;
19 December 2018
9 October 2019
7 9204299 Zhe Yi Lu Zou Lai Yang Zong Wei 23 December 2017;
9 October 2019
8 9206680 Ke Sun Yan Zi 23 December 2017;
9 October 2019
9 9206698 Ku Gua 苦瓜 Chen Yi Xun 23 December 2017;
19 December 2018
10
9206711
Yes & No
Yes & No
Zhang Jing Xuan
9 October 2019
Notes:
(a)Zhang Xue You, Chen Yi Xun, and Zhang Jing Xuan are artists included in the list of artists and singers listed in the annual Information Kit.
(b)Italicised text refers to the conduct admitted by Yi Star.
(c)Plain text refers to conduct not admitted by Yi Star.
CONFIDENTIAL ANNEXURE B
[REDACTED]
14
7