Audio-Visual Copyright Society Ltd v University of Auckland
[2002] NZCA 287
•21 October 2002
| IN THE COURT OF APPEAL OF NEW ZEALAND | CA8/02 |
| BETWEEN | AUDIO‑VISUAL COPYRIGHT SOCIETY LTD |
| Appellant |
| AND | THE UNIVERSITY OF AUCKLAND AND OTHERS |
| Respondents |
| Hearing: | 15 October 2002 |
| Coram: | Blanchard J Robertson J Randerson J |
| Appearances: | D J Chisholm for Appellant No appearance for Respondents |
| Judgment: | 21 October 2002 |
| JUDGMENT OF THE COURT DELIVERED BY RANDERSON J |
Introduction
This appeal raises questions as to the jurisdiction of the Copyright Tribunal established under the Copyright Act 1994 (the Act) to determine disputes over licensing schemes referred to it under s 150 of the Act.
The appellant is a copyright collecting society representing a number of owners of copyright subsisting in broadcasts, films (including television films), and cable programmes.
Background
In 1997, representatives of the appellant and the New Zealand universities met to negotiate an acceptable licensing scheme under which the universities could obtain licences which would, in return for payment of a fee, permit them to use or copy such material without infringing copyright.
No agreement having been finalised, the appellant wrote on 1 March 1999 to the universities as well as to a range of other tertiary institutions giving formal notice of the licensing scheme and advising it would commence on 1 July 1999. Although there were further negotiations after that date, a final agreement was not reached and, in April 2000, the appellant filed a reference with the Copyright Tribunal under s 150 seeking an order that the licensing scheme be confirmed or, alternatively, an order varying the scheme to the extent the Tribunal determined to be reasonable.
The reference to the Tribunal named some thirty‑six respondents. These were the eight universities which are respondents to this appeal and a number of polytechnics and colleges of education.
After the reference was filed with the Tribunal, the universities applied to strike out the reference, submitting there was no jurisdiction in the Tribunal to consider it under s 150 on the grounds that the scheme was not “in operation” in terms of that section. Rather, it was submitted the reference should have been made under s149 which relates to proposed licensing schemes. The Tribunal accepted that argument but declined to treat the reference as being made under s149. Accordingly, it was struck out.
In a judgment delivered on 5 December 2001, the High Court on appeal under s 224 of the Act, upheld the decision of the Tribunal. In the High Court, only the eight universities were cited as respondents but the remaining respondents who had been named in the Tribunal were served with the notice of appeal and abided the decision of the Court.
The appellant appealed to this Court. A settlement was then reached with the eight university respondents to the appeal. The remaining respondents before the Copyright Tribunal are not formally parties to this appeal but have advised counsel for the appellant that they abide the decision of this Court.
We are satisfied it is appropriate for us to proceed to consider the appeal despite the settlement with the university respondents. Counsel for the university respondents has confirmed in a memorandum that it is understood the appellant wishes to continue with the appeal and offers no opposition to that course. The appeal will not now impact upon the eight university respondents but the appellant is entitled to have a final ruling on the issue of jurisdiction as it still intends to proceed with its reference before the Tribunal if permitted to do so as a result of this appeal.
The substantive issues for determination are:
[a]Whether the Tribunal had jurisdiction to consider and determine the reference under s 150; and
[b]If not, whether the Tribunal ought to have treated the reference as being brought under s 149 of the proposed licensing scheme.
Statutory background
For many years, the United Kingdom, Australia, and New Zealand have all had provisions in their copyright legislation for licensing schemes of the type under consideration. Section 39 of our Copyright Act 1962 was based on s25 of the Copyright Act 1956 (UK). Both referred to licensing schemes “in operation” but not to “proposed” schemes. The Copyright, Designs and Patents Act 1988 (UK) now contains provisions in terms substantially similar to ss149 and 150 of our 1994 Act covering references to both proposed schemes and those in operation. In Australia, the equivalent sections are ss 154 and 155 of the Copyright Act 1968 (Cwlth). There are some differences in these jurisdictions as to who may make references and who may be parties to any reference, but all draw the distinction between proposed schemes and those in operation. No authority was cited to us which has directly considered the matter at issue.
As noted in Ricketson and Creswell, The Law of Intellectual Property : Copyright, Designs and Confidential Information, 2nd edition, 2001, at paragraph 15.0, collective action in the form of organisations of copyright owners is a feature of many areas of copyright practice, particularly those involving performing and reproduction rights. It is said to be more convenient for intending users to deal with a single licensing authority offering standard licence conditions rather than dealing with a multiplicity of individual copyright owners. Undoubtedly, the system also has advantages for copyright owners in having licensing matters dealt with on their behalf by a single body and on common terms.
Section 2 of our Copyright Act defines “licensing body:
2 Interpretation
(1) In this Act, unless the context otherwise requires,—
…licensing body means a body of persons (whether corporate or unincorporate) that, as copyright owner or prospective copyright owner or as agent for a copyright owner,—
(a) Negotiates copyright licences; and(b)Grants copyright licences, including licences that cover the works of more than one author:
…
“Licensing scheme” is defined by the same section:
licensing scheme means a scheme setting out—
(a)The classes of cases in which the operator of the scheme, or the person on whose behalf the operator acts, is willing to grant copyright licences; and
(b)The terms on which copyright licences would be granted in those classes of cases;—
and for the purpose of this definition a scheme includes anything in the nature of a scheme, whether described as a scheme or as a tariff or by any other name:
“Copyright licence” means “a licence to do, or authorise the doing of a restricted act.” The latter refers to any of the activities described in s16 which include copying or broadcasting a copyright work.
Where licences are available under a licensing scheme and the relevant educational establishment knows of their availability, the exemption from infringing copyright under s48(1) of the Act is not available. In such circumstances, the institution runs the risk of infringing copyright unless it obtains such a licence. Section 48 provides:
48 Recording by educational establishments of broadcasts and cable programmes
(1) A recording of a broadcast or cable programme, or a copy of such a recording, may be made by or on behalf of an educational establishment for the educational purposes of that establishment without infringing copyright in the broadcast or cable programme, or in any work included in it.
(2) This section does not apply if or to the extent that licences authorising the recording of a broadcast or cable programme by or on behalf of an educational establishment are available under a licensing scheme and the educational establishment knew that fact.
It has not been disputed at any stage that the licensing scheme at issue is one which falls within ss148(a) or (b) of the Act. Accordingly, ss149 to 155 of the Act apply. Sections 149 and 150 are now set out in full:
149 Reference of proposed licensing scheme to Tribunal
(1) The terms of a licensing scheme that—
(a)Is proposed to be operated by a licensing body; and
(b)Is proposed to apply generally or in relation to any description of cases—
may be referred to the Tribunal by—
(c) The operator of the proposed scheme; or(d)An organisation claiming to be representative of persons claiming that they require licences in cases of a description to which the scheme would apply.
(2) The Tribunal shall first decide whether to entertain the reference and may decline to do so on the ground that the reference is premature.
(3) If the Tribunal decides to entertain the reference, it shall consider the matter referred and make such order, either confirming or varying the proposed scheme, either generally or so far as it relates to cases of the description to which the reference relates, as the Tribunal may determine to be reasonable in the circumstances.
(4) The order may be made so as to be in force indefinitely or for such period as the Tribunal may determine.
150 Reference of licensing scheme to Tribunal
(1) If, while a licensing scheme is in operation, a dispute arises between the operator of the scheme and—
(a)A person claiming that he or she requires a licence in a case of a description to which the scheme applies; or
(b)An organisation claiming to be representative of such persons,—
the operator or that person or organisation may refer the scheme, in so far as it relates to cases of that description, to the Tribunal.
(2) A scheme that has been referred to the Tribunal under this section shall remain in operation until proceedings on the reference are concluded.
(3) The Tribunal shall consider the matter in dispute and make such order, either confirming or varying the scheme so far as it relates to cases of the description to which the reference relates, as the Tribunal may determine to be reasonable in the circumstances.
(4) The order may be made so as to be in force indefinitely or for such period as the Tribunal may determine.
Decision of the Tribunal
By agreement, the application by the eight universities to strike out the appellant’s reference was heard by Judge Gaskell sitting alone as the Chairperson of the Tribunal. She accepted that a licensing scheme was “in the nature of a standing invitation to treat” and that the setting out of the terms upon which the licensing body was willing to grant licences was a unilateral act for which the agreement of users or potential licensees was unnecessary (Performing Rights Society Ltd v Workingmen’s Club and Institute Union Ltd [1988] FSR 586, 592). However, she determined that the terms of such a scheme must be known, settled, and fixed before a scheme could properly be described as such. She saw the willingness of the appellant to negotiate the terms on which it was prepared to grant licences as being inconsistent with it granting licences on the standard terms set out in the document which, it was claimed, came into operation as a licensing scheme on 1 July 1999.
The Judge also determined that a licensing scheme was not “in operation” in terms of s150 until a licensee had accepted a licence available under the scheme. It might have been in existence, she said, but that was not the same thing as being in operation.
Finally, the Judge concluded that it would not be appropriate to treat the application as brought under s 149 as the matter had not been fully argued and it was not for a member of the Tribunal, sitting alone on an interlocutory matter, to decide whether the reference should be so treated.
Decision of the High Court
On appeal, Morris J upheld the findings of the Tribunal for much the same reasons as found favour in the Tribunal. His Honour considered there was a temporal aspect to s150 and that it contemplated only a licensing scheme presently in operation in the sense that a licence had already been granted under it. By contrast, the High Court Judge saw s149 as applying to proposed schemes not yet in operation. He saw s149 as a means of regulatory control. Once the Tribunal had approved or varied the proposed scheme under s 149, the scheme could come into operation. Only at that point could s150 be invoked. He saw s150 as enabling a person requiring a licence to refer the matter to the Tribunal to challenge the particular terms of the individual licence while still leaving intact the licensing scheme as a whole. There was no ability under s150 to challenge the licensing scheme as a whole. In the Judge’s view, that could be done only under s149.
Morris J also held that it was not appropriate for the High Court on an appeal, limited to a question of law, to convert the appellant’s application into one under s149. The Judge considered that the appellant should make proper application to the Tribunal which could then consider whether to entertain it in terms of the preliminary discretion under s149(2).
Discussion
We are satisfied that the Tribunal did have jurisdiction to consider the appellant’s reference under s150.
The licensing body as operator of a licensing scheme has various options. It may refer the matter to the Tribunal under s149 before the scheme comes into operation. Or it may simply notify affected parties that the scheme is available and advise them of its terms. It may also refer the matter to the Tribunal under s150 if a dispute has arisen.
The licensing body is not obliged to refer the matter under s149 as a preliminary to a reference under s150. Nor is s149 to be viewed as regulatory in nature. The ability of the operator of the scheme (or of an organisation claiming to be representative of persons requiring licences) to refer the matter to the Tribunal is expressed in discretionary terms. If the licensing body decides to refer the matter to the Tribunal under s149 before the scheme has come into operation, the reference is made as an operator of a proposed scheme. Unlike s150, it is not necessary for there to be any dispute before a reference is made under s149, but the existence of a dispute does not preclude jurisdiction under that section. Subject to the discretion to decline to entertain the reference under subs (2), the Tribunal considers the matter referred to it and makes an order either confirming or varying the proposed scheme, either generally or so far as it relates to cases of the description to which the reference relates. If the scheme is varied, it is to be on such terms as the Tribunal determines are reasonable in the circumstances.
Once the Tribunal has determined the matter, its order may remain in force indefinitely or for such period as the Tribunal may determine. Presumably, any such scheme would have a date for commencement, after which it would become a licensing scheme “in operation”.
The second alternative available to a licensing body is simply to notify affected parties that a licensing scheme as defined by the Act is available and the terms of that scheme (Halsbury, vol. 9(2), paragraph 226, and The Modern Law of Copyright and Designs, 3rd edition, paragraph 26.12). We are satisfied that any such scheme is “in operation” in terms of s150 from the moment of its commencement, usually on the date on which it is stipulated to commence. Where a dispute arises between the operator of the scheme and a person claiming that he or she requires a licence in a case to which the scheme applies (or with an organisation claiming to be representative of such persons), the scheme may be referred to the Tribunal by the operator or that person or organisation. A person “requires a licence” in terms of s150(1)(a) where, in the absence of such a licence, that person would be at risk of infringing copyright by doing any restricted act in relation to the relevant work. A person who “requires a licence” can therefore be someone who has already obtained a licence.
In our view, there is no need for a licensee to have accepted a licence under the scheme before it can be said to have come into operation. The scheme is “available” in terms of s48 and is “in operation” under s150 as soon as it is notified and its commencement date is reached. As the High Court observed in the Performing Rights Society case at 592, if prospective users dislike the terms, they need not apply for a licence. But the licensing scheme is nevertheless in operation for the purposes of s150. If the Tribunal’s view of the matter were correct, an individual who disputed the terms of a licence available under the scheme could not refer the matter to the Tribunal under s150 unless someone else had already entered into a licence under the scheme or unless the person in dispute had done so. In such a case, an individual would not have the right to refer the matter to the Tribunal under s149 because references may be made under that provision only by the operator of a proposed scheme or an organisation claiming to be representative of persons claiming they require licences of the type in question.
The powers of the Tribunal under both ss149 and 150 relate to confirming or varying the licensing scheme. There is no jurisdiction for the Tribunal under those sections to deal with the terms of individual licences. The scheme must be approved as a whole or varied in such manner as the Tribunal determines to be reasonable in the circumstances. The Tribunal is also required, in determining what is reasonable, to have regard to the availability of other schemes or licences and their terms and is obliged to exercise its powers to ensure there is no unreasonable discrimination between licensees or prospective licensees (s161).
It follows from these provisions that the licensing scheme must be one in which licences will be available on the same terms to persons requiring licences in a case to which the scheme would apply. But it does not follow that a licensing body which negotiates over the terms of a scheme prior to or during the course of a reference under ss149 or 150 somehow renders the scheme invalid or inoperative. We are satisfied that the evidence in this case established that the published scheme remained available in the form in which it was notified on 1 March 1999, even though the appellant announced a willingness to negotiate changes to the scheme. As the Judge in the High Court noted by way of example, the appellant’s letter to tertiary institutions of 9 July 1999 stated:
Although discussions are continuing with the NZVCC Standing Committee on Copyright in regard to changes they are seeking to the scheme, no changes have been finally agreed and the published scheme remains available.
As the Judge observed, there was other correspondence to similar effect. The willingness to negotiate amended terms for the scheme did not mean that the appellant was at all times prepared to negotiate the terms of individual licences. The invitation to treat remained certain in terms of the scheme as published unless and until there were agreed changes to the scheme as a whole or it was varied by order of the Tribunal. Provided the terms of the scheme remained available to all potential users, negotiations to amend the scheme as a whole did not detract from the scheme’s validity. Nor did they render it inoperative.
It is desirable that parties should be encouraged to resolve disputes and to reach agreement upon matters either before or after they are referred to the Tribunal. Parties should not be deterred in that process by the prospect that licensing schemes which are available and in operation would be jeopardised by such negotiations. It is almost inevitable that negotiations over the terms of such schemes will be required both before and during their operation. Generally speaking, such schemes are of limited duration and negotiations for a new or varied scheme will occur as a scheme reaches the end of its stipulated term. But, unless and until the terms are changed by agreement or by order of the Tribunal or the operator withdraws the scheme, it remains in full force and effect.
It is not strictly necessary for us, in view of our conclusion on the first issue, to express any view about whether the Tribunal ought to have treated the application as one under s149. There was jurisdiction under s150 and the order to strike out was therefore wrongly made. We note the Chairperson’s reluctance to treat the reference as one made under s149 in the absence of the other members of the Tribunal. Where, however, no person would be prejudiced thereby, the Tribunal should be ready to consider treating an application as being made under the appropriate section where necessary to avoid undue technicality and the cost and delay to the referring party in starting again.
Result
The appeal is allowed. The order made by the Tribunal striking out the reference under s150 of the Copyright Act 1994 is quashed and the reference reinstated. It will now be a matter for the Tribunal to consider the application on its merits.
The appellant does not seek any order as to costs.
Solicitors:
KPMG Legal, Auckland for Appellant
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