Universal Music & Ors v Hendy Petroleum & Ors
[2003] FMCA 373
•5 September 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| UNIVERSAL MUSIC & ORS v HENDY PETROLEUM & ORS | [2003] FMCA 373 |
| COPYRIGHT – Breach of copyright – compilation CD’s – where the respondents purchased certain compilation CD’s – where the respondents decided to sell the compilation CD’s in their garage/convenience store – where trap orders were made – where the respondents claimed innocent infringements – whether the respondents were innocent infringers – whether the respondents were “burning” or agreeing to “burn” additional CD’s – whether the directors of the first respondent were joint tortfeasors with the first respondent – where the applicants elected to seek relief in the form of damages – consideration by the court of recently amended s.115(4) of the Copyright Act when considering additional damages – consideration of deterrence – consideration of flagrancy. |
Copyright Act 1968 (Cth), ss.10, 13(1), 85, 101(1A), 103(1)(a), (b) and (2), 115(2), (3), (4)(b)(i)(ia)(ib), (ii), (iii), (iv), 116(1), 126, 131D
WEA International Inc. v Hanimex Corporation Ltd (1987) 10 IPR 349 Microsoft Corporation v Auschina Polaris Pty Limited (1996) 36 IPR 225
Dr Martens Australia Pty Ltd and Others v Bata Shoe Co of Australia Ltd & Ors [1997] 505 FCA (29 May 1997)
LED Builders Pty Ltd v Eagle Homes Pty Ltd [1996] 972 FCA 1 (13 November 1996)
Universal Music Australia Pty Ltd v Miyamota [2003] FCA 812
Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88
Autodesk Inc v Yee (1996) 68 FCR 391
Sullivan v FNH Investments Pty Ltd trading as Palm Bay Hideaway [2003] FCA 323
Microscope Corporation v Glostar Pty Ltd [2003] FCA 210
Microsoft Corporation v Goodview Electronics Pty Ltd [2000] FCA 1852
Prior v Sheldon [2000] FCA 438 and Microsoft Corporation and Another v ATIFO Pty Ltd and Others [1997] 679 FCA (16 May 1997)
| Applicant: | UNIVERSAL MUSIC AUSTRALIA PTY LTD (ACN 000 158 592) |
| Second Applicant: | SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED (ACN 000 033 581) |
| Third Applicant: | BMG MUSIC AUSTRALIA LIMITED (ACN 004 157 564) |
| First Respondent: | HENDY PETROLEUM PTY LIMITED (ACN 082 860 428) |
| Second Respondent: | MICHAEL HENDY COOTE |
| Third Respondent: | DAVID JOHN COOTE |
| File No: | SZ 815 of 2003 |
| Delivered on: | 5 September 2003 |
| Delivered at: | Sydney |
| Hearing date: | 25 August 2003 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr J M Hennessy |
| Solicitors for the Applicant: | Gilbert & Tobin |
| Counsel for the Respondent: | Mr J Miller |
| Solicitors for the Respondent: | Bartier Perry |
ORDERS
The Court Declares that each of the first, second and third respondents infringed the copyright of the first, second and third applicants in the following sound recordings, referred to in the affidavit of Michael John Williams:
ARTIST RECORDING TITLE LICENSEE Jennifer Lopez featuring Nas
I’m Gonna Be Alright (Remix)
Sony
Ja Rule featuring Case
Livin’ It Up
Universal
112
Dance With Me
BMG
Nelly
Hot in Herre
Universal
Boys II Men
Roll Wit Me
BMG
Eve
Gangsta Lovin’ (featuring Alicia Keys)
Universal
Eminem
Without Me
Universal
The Court Orders that the first, second and third respondents be permanently restrained from selling, or by way of trade offering or exhibiting for sale or distributing for the purpose of trade or by way of trade exhibiting in public, the following CD’s:
Compact Disc
1
R&B Flavas Project One – by DJ Mirage
2
R&B Flavas Volume 4 – by DJ Mirage
3
Black Label volume 1 – by Moto – Chocolate Boy Wonder
Delivery up of all the CD’s entitled R&B Flavas Project 1, R&B Flavas Volume 4 and Black Label Volume 1 in the possession or control of the first, second or third respondents.
Delivery up of any records that contain a copy of, the whole of or a substantial part of any music CD’s released by the first, second or third applicants or any sound recordings contained within the Universal Music catalogue, the Sony Music catalogue or the BMG Music catalogue, without the license of the first, second or third applicants.
The respondents pay to the applicants the sum of $299.90 by way of damages pursuant to s.115(2) of the Copyright Act 1968.
The respondents pay to the applicants the sum of $17,500.00 damages pursuant to s.115(4) of the Copyright Act 1968.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ 815 of 2003
| UNIVERSAL MUSIC AUSTRALIA PTY LTD (ACN 000 158 592) |
First Applicant
| SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED (ACN 000 033 581) |
Second Applicant
| BMG MUSIC AUSTRALIA LIMITED (ACN 004 157 564) |
Third Applicant
| HENDY PETROLEUM PTY LIMITED (ACN 082 860 428) |
First Respondent
| MICHAEL HENDY COOTE |
Second Respondent
| DAVID JOHN COOTE |
Third Respondent
REASONS FOR JUDGMENT
Introduction
On 13 May 2003 amendments to the Copyright Act 1968 (the “Copyright Act”) which, pursuant to s.131D conferred jurisdiction on the Federal Magistrates Court in respect of civil actions under Part V of the Copyright Act (Remedies and Defences) came into force. On the same day the applicants lodged proceedings by way of an application against the respondents claiming declarations that each of the first, second and third respondents had infringed the copyright of the first, second and third applicants in the sound recordings set out below which were contained in three compact discs, whose particulars are also set out below:
The applicants also sought delivery up of infringing material, damages pursuant to s.115(2) of the Copyright Act or in the alternative, at the election of the applicants, an account of profits. Damages pursuant to ss.116(1) and 115(4) of the Copyright Act were also sought.
The three applicants in this case are licensees of the undermentioned recording titles:
ARTIST
RECORDING TITLE
LICENSEE
Jennifer Lopez featuring Nas
I’m Gonna Be Alright (Remix)
Sony
Ja Rule featuring Case
Livin’ It Up
Universal
112
Dance With Me
BMG
Nelly
Hot in Herre
Universal
Boys II Men
Roll Wit Me
BMG
Eve
Gangsta Lovin’ (featuring Alicia Keys)
Universal
Eminem
Without Me
Universal
The alleged infringing CD’s are:
Compact Disc
1
R&B Flavas Project One – by DJ Mirage
2
R&B Flavas Volume 4 – by DJ Mirage
3
Black Label volume 1 – by Moto – Chocolate Boy Wonder
Relevant provisions of the Copyright Act
(1) The term “sound recording” is defined in s.10 of the Copyright Act as “the aggregate of the sounds embodied in a record”.
(2) Section 13(1) of the Act provides in relation to the acts comprised in copyright: “a reference in this Act to an act comprised in the copyright in a work or other subject matter shall be read as a reference to any act that, under this Act, the owner of the copyright has the exclusive right to do.
(3) Section 85 of the Act provides that copyright in relation to a sound recording is the exclusive right to, inter alia make a copy of the sound recording.
(4) Section 101(1) of the Act provides that “…a copyright subsisting by virtue of this Part is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorises the doing in Australia, of any act comprised in the copyright.” This Part of the Act deals with copyright in matters including sound recordings by virtue of section 85.
(5) Section 103(1) of the Act provides that copyright is infringed by a person who, in Australia, and without the licence of the owner of the copyright “(a) sells, lets for hire, or by way of trade offers or exposes for sale or hire, an article; or (b) by way of trade exhibits an article in public; if the person knew, or ought reasonable to have known, that the making of the article constituted an infringement of the copyright…”
The applicants claim to be entitled to the benefit of the presumptions of subsistence and ownership of copyright found in s.103(2) of the Copyright Act. That section introduces subsistence and ownership presumptions specific to the form of labelling generally used in relation to sound recording. Where records have been supplied to the public bearing a label or mark consisting of the (p) “symbol” accompanied by a specified year and the name of a person, the label or mark attracts a presumption of copyright subsistence and ownership without any additional information. The applicants filed affidavits which satisfied these requirements and in addition they claim the benefit of the presumption in s.126 of the Copyright Act because copyright has not been put in issue by the respondents. In fact, the respondents now accept that in the events described below they and each of them were guilty of the breaches of the Copyright Act claimed. What was in issue here was the nature of the infringement and whether it led to the substantial damages claim made by the applicants.
History and findings of fact
Hendy Petroleum Pty Ltd (Hendy) is a company in which both the second and third respondents, who are father and son, are directors. Mr Hendy senior is the sole shareholder in the company.
At all material times Hendy was the proprietor of a service station and convenience store situated at 449 Great Western Hwy, Wentworthville. The store was operated by the second respondent Michael Coote who usually worked from 5am to 4pm and the third respondent David Coote who would usually work from 4pm to midnight. They were assisted when necessary by a man called Naruuz or his sister Catherine. The convenience store sold the usual type of goods found in such places including CD’s. The CD’s were sold on a consignment basis from a company which specialises in supplying convenience stores known as “CD’s Anywhere.” Racks were provided in which CD albums known as jewel cases were displayed and when a person decided to purchase a particular CD the disk itself was taken out of a cupboard and placed in the jewel case. There is no suggestion made in these proceedings that CD’s Anywhere were in any way involved in the breaches of copyright alleged.
Mr Michael Coote’s evidence is that around about the 15 December 2002 he went into the Oxford Tavern in Oxford Street, Darlinghurst for a drink with a business acquaintance. The business acquaintance went to the toilet and Mr Coote noticed that a crowd of people had gathered around a man who he described as being reasonably well dressed and who was carrying a bag. He saw that the man was offering CD’s for sale. He states that he thought he would buy some CD’s for his son. He later suggested in evidence that he was buying the CD’s not only for his son but also for his stepson and his son’s friends. He asked the man how much the CD’s were being sold for and man told him $20 each. He told the man to select ten CD’s, asked him for a good selection and paid him $200 in cash. He did not receive a receipt. He stated that:
“As the fellow was openly offering the CD’s for sale in a public place I assumed there was nothing illegitimate about the CD’s.”
Mr Michael Coote said that he returned home shortly thereafter and he told his son that he had the CD’s and offered them to him. Sometime later Mr David Coote told his father that he didn’t really like the CD’s, that the music was not up to date and suggested that they sell them through the business.
Mr Michael and Mr David Coote deposed to the fact that they then took the CD’s into the business and placed them in what was described at “a hot spot” on the counter immediately in front of the cash register and then proceeded to sell them. They were priced at $25. They claimed that they had sold nine of the CD’s and one of them had been mislaid although the jewel case was found in a cupboard. Mr Michael and Mr David Coote claimed that they were not aware that the CD’s were manufactured in breach of copyright until they had been contacted by the solicitors for the applicants. They believed that Mr Michael Coote had been misled by the man he bought the CD’s from and that they were innocent infringers. The CD’s which the respondents bought and which are the subject matter of these proceedings are:
Compact Disc
1
R&B Flavas Project One – by DJ Mirage
2
R&B Flavas Volume 4 – by DJ Mirage
3
Black Label volume 1 – by Moto – Chocolate Boy Wonder
The evidence called by the applicants can be divided between that of a formal nature which went to establishing the copyright in the applicants of the titles which made up the infringing CD’s and evidence about finding the infringing CD’s in the possession of the respondents and the consequent correspondence between the parties.
I will not deal with the formal evidence, because not only am I satisfied that it establishes the necessary legal basis for the claim but it is not disputed by the respondents.
As part of the evidence a video was shown. This was taken by Mr William Bush an investigator contracted to the Australian Recording Industries Association to conduct investigations on its behalf. He deposed to attending at the respondents service station on 14 February 2003 where he purchased a compact disc entitled “R&B - DJ Mirage-Flavas Volume 4 (Ladies Anthem)” for $29.99. His receipt for the purchase is annexed to his affidavit. He also stated that an attendant opened the cupboard doors behind the counter and he saw approximately six additional compact disc’s also labelled DJ-Mirage which appeared to be the same or similar to the CD he had purchased. He said that he also saw a tray containing approximately fifteen other compact discs. He asked to see another CD and was shown one entitled “Black Label Vol 1”. The jewel case for that CD was empty and so he had a conversation with the person behind the counter concerning getting more CD’s in.
The video to which I previously referred was apparently taken at the same time. It was not a video equipped with sound. The video showed the purchase but it was not really clear how many more of the allegedly infringing CD’s were available for sale. After considering the video and the evidence given by the parties I am of the view that the applicants have been unable to show that there were more than six or seven of the infringing CD’s available for sale on 14 February. In all probability most of the CD’s which could be glimpsed in the video belonged to the consignment stock of CD’s Anywhere. The video showed two persons behind the counter a male and a female. Mr Michael Coote identified the female as Cathy. He said that the male person was not Naruuz, he might have been Cathy’s boyfriend and he had no authority to be behind the counter. Mr Michael Coote was cross-examined on the basis that the evidence indicated that the first respondent was prepared to burn CD’s for intending customers. I am satisfied that there is no direct evidence that this occurred and I am not prepared to make any finding that the infringing CD’s were manufactured by any of the respondents.
Under cross-examination both Mr Michael Coote and Mr David Coote agreed that they were frequently asked by persons coming into the petrol station to purchase items which they believed were ‘suspicious’. They described these goods as being anything from cigarettes to smoked salmon by way of pornographic videos. Both the Cootes gave evidence that the premises had been robbed on several occasions and indeed this is one of the many reasons why they decided to give up the business in May 2003.
Mr Michael Coote also agreed that when he was first approached about this matter by Ms Heather Tropman, a solicitor at Gilbert & Tobin, he had a telephone conversation with her in which he told her that he had bought the CD’s from a DJ in a nightclub. This is not the story that he told in his affidavit. He told the court that the later story of buying the CD’s in the Oxford Tavern was the true one.
I do not believe that the purchase of these CD’s was an innocent one. Firstly, there is the difference in the two stories to which I have just referred. Secondly, Mr Coote did not purchase ten different CD’s, he purchased ten CD’s of three types. We do not know exactly how many of each CD there was, but the most likely combination is three of two and four of one. It is inherently unlikely that a father would buy three or four copies of a CD for his son as a present. I accept that Mr Coote may have more than one son but even so I am unable to accept his story in this regard. I am also of the view that being in the business in which he was, Mr Michael Coote was well aware that people do not sell legitimate CD’s in pubs out of duffle bags. He had enough experience of people trying to sell him ‘suspicious’ items to know that a legitimate seller gives a receipt and attends upon one’s premises to effect a sale.
Mr David Coote is a younger man. He likes recorded music. I am satisfied that he was also aware that these CD’s were not legitimate. He knew that the titles were not the latest. He knew the artists. He knew they were represented by the different record companies. It must have raised some suspicion in his mind as to why they would all be present on the same compilation disk.
There is an additional matter. When this matter came before me for the first directions hearing various orders were made concerning the future conduct of the case. These included the filing by the respondents of a defence, affidavits and the provision of discovery. None of those things were done. In particular no discovery was given. Under cross-examination questions were put to both Mr Michael and David Coote about the records concerning sales of these CD’s or in fact of anything. Mr Michael Coote advised that all the company records had been stolen because they were kept in empty cigarette cartons. Because of this they were unable to be discovered. No corroborative evidence, such as indications of reports to the police or an insurance company were provided. Whilst I am not prepared to say that the robbery did not occur the failure to provide this discovery was an additional factor which militates against an innocent explanation for the sale of these infringing albums.
The respondents’ attitude to these proceedings, their failure to file a defence, their delay until the hearing before filing any affidavits, their failure to supply records for the purpose of discovery can either be construed as that of a defendant who has put his head very deeply into the sand or else of one who is seeking to prevent the applicant from establishing the extent of the admitted infringements. I would like to believe the former. Mr Michael Coote gave his evidence confidently. He appears to have had a successful career outside the operation of convenience stores. He is no longer in this business. But I am not so convinced. I believe that Mr Michael Coote bought these CD’s, and possibly more of them, knowing full well that they were constituted of infringing material and he sought to make a commercial profit from the sale of this stock.
Remedies
When this matter first came before me the respondents consented to injunctions. I did not hear much from the applicants’ counsel about further order for delivery up. The respondents no longer own the business. I am prepared to accept that there are no further infringing CD’s in their possession custody, power or control.
Section 115 of the Copyright Act is in the following form:
Division 2 - Actions by owner of copyright Actions for infringement
(1) Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright.
(2) Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.
(3) Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.
(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 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.
Section 115(4) has been substantially amended by the addition of subsections 115(4)(b)(i)(ia) and (ib). These amendments came into effect in May 2003. I believe this is the first case brought under the new provisions. Before I deal with this I should deal with the question of who will be liable for these damages.
The sales were conducted by the first respondent and there can be no doubt that it is liable for damages. Do the second and third respondents have accessorial liability? This type of liability has been considered by the Federal Court in a number of cases including WEA International Inc. v Hanimex Corporation Ltd (1987) 10 IPR 349; Microsoft Corporation v Auschina Polaris Pty Limited (1996) 36 IPR 225 where Lindgren J set out various tests pursuant to which the director of a company may be equally liable for its tortious conduct. His Honour adopted a ‘procured or directed’ test and at [123] made the following observation:
“The ‘procured or directed’ test, sometimes referred to as the ‘authorised, procured or directed’ test, focuses attention on the relationship between the director’s intention and the particular corporate conduct which the law characterises as tortious. What seems to underlie this test is the notion that, necessarily, companies can engage in tortious conduct only through human beings, and at least ordinarily, where a particular human being involved and responsible to an appropriate extent can be identified , he should, as a matter of policy, be liable.”
I do not think it is necessary in this particular case to apply the Auschina doctrine because in my view the actions of Michael and David Coote fall within s.101 of the Copyright Act which is in the following form:
Infringement by doing acts comprised in copyright
(1) Subject to this ActC:\doc-conversion\inputToHtml\index.html, a copyright subsisting by virtue of this Part is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.
(1A) In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in a copyright subsisting by virtue of this Part without the licence of the owner of the copyright, the matters that must be taken into account include the following:
(a)the extent (if any) of the person's power to prevent the doing of the act concerned;
(b)the nature of any relationship existing between the person and the person who did the act concerned;
(c)whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.
(2) The next two succeeding sections do not affect the generality of the last preceding subsection.
(3) Subsection (1) applies in relation to an act done in relation to a sound recording whether the act is done by directly or indirectly making use of a record embodying the recording.
(4) Subsection (1) applies in relation to an act done in relation to a television broadcast or a sound broadcast whether the act is done by the reception of the broadcast or by making use of any article or thing in which the visual images and sounds comprised in the broadcast have been embodied.
Subsection 101(1A) partly codifies the concept of authorisation. I am satisfied both the second and the third respondents had the power to prevent the sale of these CD’s. They were in the nature of a relationship of employer/employee with the person who actually did the sale that was evidenced by the video. In evidence David Coote admitted that he may well have sold the CD’s himself but neither Michael nor David Coote took any steps reasonable or otherwise to prevent the sale of the CD’s. To my mind the actions of Mr Michael Coote in buying the CD’s and in Michael and David Coote in deciding to sell them through the business and then so doing constitutes them effectively as joint tortfeasors with their company in the infringement.
The applicants have elected to seek compensatory damages in lieu of an account of profits. They made that election in their written submissions and argued it was only just before trial that they were in a position to make an informed decision.
“The failure of the respondents to give discovery, the absence of any paperwork, invoices or other documentation whatsoever to confirm the number of CD’s purchased and sold by them or the price at which the infringing CD’s were purchased for and sold by the first respondent means that the applicants cannot be informed of matters relevant to the election in favour of an account of profits.”
I am satisfied that the applicants are entitled to make this election now; Dr Martens Australia Pty Ltd and Others v Bata Shoe Co of Australia Ltd & Ors [1997] 505 FCA (29 May 1997); LED Builders Pty Ltd v Eagle Homes Pty Ltd [1996] 972 FCA 1 (13 November 1996). The respondents admitted to purchasing and selling ten CD’s. The applicant argues that the loss in this case is the loss of sales of the applicants of records of the artists whose copyrights was infringed.
“Such loss amounts to the loss of sales of CD’s by each of those artists and a loss of $299.90 calculated on the basis of conversion of infringing CD’s; calculated on the basis that the first respondent sold ten compilation albums for $29.99.”
The respondents in their evidence said that although the trap CD was sold for $29.99 the other CD’s sold for $25. I was not provided with any evidence of the number of the sales of CD’s that may have been lost by the particular artists on whose behalf claims were being made. Although I was inclined to accept the evidence of Mr Michael Coote and Mr David Coote that the CD’s had been sold for $25 there was no corroborative evidence of this. I have already expressed views as to their credit and in circumstances where the trap order was made for $29.99 I think it best to assume that that was the price which was paid for all of the CD’s. I would award compensatory damages of $299.90.
These compensatory damages are awarded because I have not accepted the respondents can bring themselves within the provisions of s.115(3) of the Copyright Act. I am satisfied that the applicants are not able to demonstrate that they were not aware and had no reasonable grounds for suspecting that their conduct would amount to infringement of copyright.
The applicants seeks to persuade me that I should also award additional damages pursuant to s.115(4) and take into account the new matters imposed into the Act by subsections 115(4)(b)(ia) and (ib). In relation to these matters I have had recourse the explanatory memorandum to the Bill in which they are explained as follows:
“Item 1
3. This item adds 2 new subparagraphs to section 115. New subparagraph 115(4)(b)(ia) provides for a court to take into account where it is proper to do so the need for deterrence of similar infringements of copyright in considering the amount of and whether or not to award, additional damages. The remedy of additional damages is not a compensatory remedy. It is a remedy directed precisely towards infringements that have an additional element beyond simple infringement. This amendment requires a court where it is satisfied that it is proper to do so to consider whether the award additional damages having regard not only to the particular circumstances of the infringement but also in the context of the broader impact on similar conduct and the award of additional damages in relation to that conduct.
4. New subparagraph 115(4)(b)(ib) directs the attention of the court where proper to do so to conduct by a defendant subsequent to infringement or after an allegation of a copyright infringement. This amendment makes it clear that the court is entitled to look not only at the conduct of a defendant prior to the infringement but to the full course of the defendant’s conduct in relation to the infringement. Action by a defendant, for example, to hide or disguise infringements, or to take other action prejudicial to the copyright owner may be taken into account in determining whether the award additional damages and the amount of that award.
5. Both of these additional factors more directly focus on the punitive aspects in the award of additional damages as appropriate.”
The applicants have submitted that the type of activity in respect of which these claims are brought, namely, the sale of illegitimate compilation CD’s, is extremely prevalent. They submit there is a need to deter retailers from selling illegal goods and profiting from them and supporting the illegal activities of those who mix and manufacture these CD’s and introduce them onto the market. They suggested that these serious infringements of copyright have a significant impact on the music industry, the artists, and the greater community that are misled into purchasing illegitimate and inferior products. This concern was upmost in the mind of Lindgren J in Universal Music Australia Pty Ltd v Miyamota [2003] FCA 812. There His Honour made orders for injunctive relief against a series of disc jockeys who had mixed compilation CD’s. His Honour has not yet made any findings as to damages.
Consideration of the purpose and extent of additional damages has been given by Burchett J in Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88 and also in Autodesk Inc v Yee (1996) 68 FCR 391 at 394. In Raben at 92 His Honour said:
“I stated my understanding of the nature of the purpose of this provision (s.115(4)) in Autodesk Inc v Yee (1996) 68 FCR 391 at 394 as follows:
“An element of penalty is an accepted feature of copyright legislation. The infringer has been regarded, at least since the 18th century, as a pirate who ought to be treated accordingly.””
The additional provisions now found in subsections (ia) and (ib) add additional factors to be taken into consideration. In this particular case I am not satisfied that the conduct of the applicants subsequent to the infringement is a matter which would be significant in my assessment of the appropriate damages to award. The applicants accepted that they had infringed, they alleged that their infringements were innocent and they made certain offers to dispose of the proceedings. Those offers were not satisfactory to the applicants and as a result the matter proceeded before me. The respondents have not to my mind attempted to hide or disguise the infringements or to take other action prejudicial to the copyright owner.
On the other hand, I do think that the deterrent factor is one to which considerable weight should be given. It seems to be notorious that compilation CD’s of the type with which this case is concerned are prevalent and the copyright owners are expending considerable sums of money as well as time and effort in an attempt to stamp it out. The activity is illegal. The court should acknowledge this and as the Parliament has given the court the ability to take into account a deterrent effect then it should do so.
There is no requirement for a nexus between the amount of compensatory damages awarded and the amount of additional damages. In Raben compensatory damages of $275.00 and additional damages of $15,000.00 were awarded. In Sullivan v FNH Investments Pty Ltd trading as Palm Bay Hideaway [2003] FCA 323 compensatory damages of $7,425 together with additional damages of $15,000.00 were given. In Microsoft Corporation v Glostar Pty Ltd [2003] FCA 210 compensatory damages of $4,375 were awarded and additional damages of $291,625. See also Microsoft Corporation v Goodview Electronics Pty Ltd [2000] FCA 1852; Prior v Sheldon [2000] FCA 438 and Microsoft Corporation and Another v ATIFO Pty Ltd and Others [1997] 679 FCA (16 May 1997).
It was noted by Jacobson J in Sullivan supra at [93]:
“In Raben Footware Tamberlin J said at [103] that in ordinary usage flagrancy connotes, amongst other things, glaring or blatant conduct. His Honour referred [103] to authority for the proposition that a flagrant infringement is one that shows calculated disregard of the copyright owners rights or cynical pursuit of benefits: see Prior v Landsdown Press Pty Ltd [1977] VR 65 at 70.”
In this case I have found that the respondents knew full well that the CD’s they were selling were not legitimate. However, I have not found that there were very many of them nor have I found that they were themselves burning new copies or that the CD’s were just the “tip of the iceberg.” To my mind the conduct of the respondents would fall towards the lower end of the range of flagrancy. I have also taken into account the matters in s.115(4)(b)(ii), (iii) and (iv) when coming to the conclusion that the appropriate award in this case would be $17,500.00.
I understand that the parties wish to be heard as to costs and I will hear them.
In relation to orders, the respondents have consented to the order sought as Order 1 (a Declaration) and I will make it. The respondents have submitted there is no basis for me to make the Orders 2 and 3 which relates to the making of copies of the infringing titles. I have already said that I am not satisfied that the respondents were indulging in this activity nor that they intended to do so in future and do not propose to make such orders. The respondents consent to Order 4, but submit that to be properly based, the words ‘making’ and ‘or authorising the making of’ should be deleted from the Order. The respondents have also consented to Order 5 although they say there are no CD’s to deliver up. This is something with which I tend to agree but I will make the order as requested. The respondents have consented to Order 6 although they say there are no such records to deliver up. In the light of that concession I will make that order.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
5
8
0