Greens Senator proposes fair use amendment to the Copyright Act

Posted by Ella Biggs and Paul Kallenbach

Image courtesy of renjith krishnan

On Thursday 27 June 2013, Greens Senator, Scott Ludlam delivered the Second Reading Speech for the Copyright Legislation Amendment (Fair Go For Fair Use) Bill 2013.  The proposed amendments address four aspects of the Copyright Act 1968 (Cth) (the Act). They are:

• removing digital locks and technical protection measures that restrict the ability of the visually impaired and the disabled to access copyright protected content (for example, allowing the reproduction of a text work as an audio work or the conversion of text to Braille);
• extending the scope of the current safe harbour provisions.  This change is aimed at ensuring that service providers, including internet service providers, search engines and public or not for profit institutions are not liable for the copyright infringement of their users (in certain circumstances);
• removing the ability for geocode mechanisms to affect the price of copyright protected content in Australia; and
• introducing a broad and technology neutral fair use provision into the Act.  This would change the approach to determining whether the use of a copyright protected work constitutes copyright infringement.

Of these proposed changes, the introduction of a broad fair use defence in the Act is the most far reaching, with the potential to significantly reshape the copyright law landscape in Australia. The fair use provision proposed by the Bill directly mirrors the equivalent provision in the United States,[1] where fair use plays a significant part in the analysis of copyright infringement.  It is unclear from the proposed Bill whether the current fair dealing defences would be repealed or how these would interact with the proposed fair use defence.

Given the potential significance of the introduction of a fair use defence, the Australian Law Reform Commission (ALRC) was commissioned to look into the issue in its report on 'Copyright and the Digital Economy'.  In its Discussion Paper, released in June 2013, the ALRC proposed a broad and flexible fair use standard that is informed by the current fair dealing defences (and some additional illustrative purposes) as well as general 'fairness' factors.[2]  The ALRC's final report is due in November 2013.

While the Bill is indicative of a movement within copyright circles to revise copyright law in Australia to make it more flexible in digital environment, it is unlikely that the Bill's proposed amendments to the Act will be passed by Parliament.  However, given the potentially wide reaching significance of the introduction of a fair use defence to Australia's copyright law, it is most unlikely that the Bill will receive any attention before the ALRC's final report on this issue is released.

[1] 17 USC § 107.
[2] Australian Law Reform Commission, 'Copyright and the Digital Economy' Discussion Paper 79 (May 2013) 90–8.

Trade mark infringement in online advertising

Posted by Ella Biggs and Kylie Diwell

Companies advertising using Google's Adwords service need to consider whether they might be infringing the registered trade marks of their competitors.

Google's Adwords service allows advertisers to purchase 'keywords' which, when entered into the Google search bar by an internet user, direct the types of search results that are returned (for example, the 'sponsored links' that appear on a Google Results page).

In Australia, the use of a trade marked term as a keyword in the context of online advertising may constitute trade mark infringement where the use is combined with a clear representation of the common origin of the goods or services. A recent decision in the United Kingdom goes further than this, finding that the use of a registered trade mark as a keyword is itself sufficient for trade mark infringement. This may have an effect on the development of the law in Australia, and this issue should be treated with caution by advertisers.

Google's Adwords policy and trade marks

On 23 April 2013, Google changed its Adwords policy in Australia relating to the ability to purchase keywords that are the subject of a registered trade mark.[1] This change also affected China, Hong Kong, Macau, Taiwan, New Zealand, South Korea and Brazil. The same change in Google's Adwords policy was announced in the UK and Ireland in May 2008.

Before this change, Google's Adwords service allowed trade mark owners to lodge a complaint with Google where their registered trade mark had been used by a competitor, which triggered an internal review process by Google. In cases where trade marked terms had been used as keywords, the infringing advertisement was removed by Google. Following the change in its policy, Google will no longer prevent advertisers from purchasing and using trade marked terms as a keyword. Without Google restricting and monitoring the use of trade mark terms in this way, a claim of trade mark infringement against the advertiser is the avenue through which trade mark owners can now stop the use of their trade marks as keywords.

Establishing trade mark infringement in online advertising

In Australia, it does not appear that purchasing and using a keyword that is the subject of a registered trade mark would fall within 'use as a trade mark' for the purposes of establishing infringement under section 120 of the Trade Marks Act 1995 (Cth) (the Act). In Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd it was found that the use of a trade marked term as a meta tag was not sufficient, on its own, to constitute 'use' for the purposes of establishing trade mark infringement.[2] However, it appears that the use of trade marked terms as keywords, when combined with clear representations of similar origin of the goods or services (for example, as a banner on a website), will be sufficient for establishing infringement under the Act.[3] With Google no longer monitoring the use of trade marked terms in online advertising, the courts will have greater scope to hear disputes and influence the development of the law in this area.

A recent decision in the United Kingdom relates to an action brought against an advertiser following Google changing its Adwords policy there in 2008. In Marks & Spencer v Interflora [2013] EWHC 1291 (Ch), the High Court found that Marks & Spencer's (M&S) use of Interflora's trade mark as a Google keyword was an infringement of Interflora's trade mark. This case marks a significant development of the law in this area and, given that Google has just changed its policy regarding the use of trade marked terms as keywords in Australia, this case may have repercussions for advertising practices here.

Significant development in the UK: Marks & Spencer v Interflora

Following the announcement of change to Google's policy regarding keywords in the UK, M&S made a considered commercial decision to purchase Interflora-related keywords on Google for the purpose of diverting internet users to its own website. Interflora argued that this conduct infringed its registered trade marks.

In finding that the conduct of M&S had infringed Interflora's trade mark, Justice Arnold of the High Court (heavily influenced by statements from the European Court of Justice, where the case had been referred following its initial hearing in the UK), repeatedly stated that the use of a trade marked term as a keyword in online advertising was not conduct that was inevitably and inherently objectionable from a trade mark perspective. However, certain factors were relevant to the finding that M&S's conduct had infringed Interflora's trade marks. In particular, the following factors were significant:

• the nature of Interflora's business model. Justice Arnold discussed the uniqueness of Interflora's business model as being a significant factor in his decision. In particular, that Interflora's brand and business model is based around providing a network for florists in geographically dispersed areas made it more likely that consumers would be confused as to whether the advertised goods originated from Interflora or M&S. That an internet user would be likely to assume a connection or affiliation between Interflora and M&S Spencer by having an M&S advertisement appear as a Google search result for 'Interflora' was a determinative factor in this regard.
• the relevant consumer. In determining the effect of M&S's advertising, the relevant perspective was that of 'the reasonably well-informed and reasonably observant internet user', initially as at 6 May 2008. This user was considered not to understand the difference between organic and advertised search results, largely because of the relative lack of internet literacy in 2008. It was found that, even in 2013, a 'significant proportion' of internet users in the UK would not appreciate the difference between a natural search result and a paid advertisement. The onus was then placed on M&S to establish that the use of the Interflora's trademarks would not confuse the consumer (with the characteristics described by the Court). M&S was unable to do this, resulting in a finding of infringement.

Implications for Australia

Although certain factors that were significant to Justice Arnold's decision in Marks & Spencer v Interflora (as described above) may limit the ability of the decision to be applied more generally, the outcome in this case illustrates an important development in trade mark law. It is of particular importance as it is the first case to hear a dispute following the change in Google's Adwords policy internationally. Now that this change has been effected by Google in Australia, the approach of this case may be persuasive to courts here when hearing similar disputes, especially where online advertisers are seeking to take advantage of the change to Google's Adwords policy.

Companies still need to be careful that they don't mislead and deceive consumers in breach of the Competition and Consumer Act 2010 (Cth) by purchasing and using Adwords, irrespective of whether their conduct would amount to trade mark infringement under Australian law. See our analysis here of the High Court's decision in Google Inc v Australian Competition and Consumer Commission [2013] HCA 1, which included a discussion of the obligations on advertisers not to mislead consumers when using Google's Adwords service.

[1] See <https://support.google.com/adwordspolicy/answer/177578?hl=en&rd+1#>.

[2] [2011] FCA 1319 [57]-[62]. 

[3] See, eg, Mantra Group Pty Ltd v Tailly Pty Ltd (No 2) (2010) 183 FCR 450 [13]-[69].

The Centre for International Economics finds that patents involved in gene based technologies are increasingly not isolated human gene sequence patents

Posted by Benita McLennan and Peter Kearney

We are probably all familiar with the opposing arguments in the 'Gene Wars' debate:

• those in favour of gene patenting argue that patents are essential to support high risk and high cost medical discovery and development;
• those against gene patenting claim that gene patents limit the accessibility and inflate the price of medical services.

A number of reports on gene patenting have made reference to the lack of economic analysis and data around gene patents, including:

• the 2004 Australian Law Reform Commission's report, Genes and Ingenuity: Gene patenting and human health; 
• the 2010 Senate Community Affairs References Committee report on Gene Patents; and
• the 2011 report by the Senate Legal and Constitutional Affairs Legislation Committee, Patent Amendment (Human Genes and Biological Materials) Bill 2010.

To address this information gap, IP Australia commissioned The Centre for International Economics (the Centre) to investigate the economics of isolated human gene patents in Australia.  The Centre recently released its final report 'Economic Analysis of the Impact of Isolated Human Gene Patents' (the Report).  A copy of the Report can be accessed here.

 

Key findings

 

The Report focuses primarily on isolated human gene sequence patents, which it defines to mean patents that include at least one claim to an isolated human gene sequence or a fragment of an isolated human gene sequence (as opposed to patents that claim modified gene sequences or only methods for using a gene sequence).

 

One of the key findings of the Report is that isolated human gene patents have, particularly since the completion of the Human Genome Project in 2003, been playing a less significant role in the patent landscape, with more and more patents focusing instead on:

• methods of using isolated gene sequences; and
• not naturally occurring DNA and genetic sequences (ie, sequences created in the laboratory).

In fact, the vast majority of full-length isolated human gene sequence patent applications were filed prior to the completion of the Human Genome Project in 2003.   This is despite the fact that gross business expenditure on research and development in the medical and health sciences sector has tripled over the past ten years, and National Health and Medical Research Council funding for research on human genetics and genomics for large public entities has increased by two and a half times.

 

Other findings of the Report include that:

• approximately $795 million was invested in gene technologies related to human health during 2011-12 (a number that has been increasing over time);
• most of that $795 million is funded by governments (specifically, 79 percent or approximately $628 million);
• analysis suggests that price premiums are paid for patent-related genetic tests;
• quantifiable monetary impacts attributable to isolated human gene sequence patents are small in terms of royalty and fee income related to the patent (specifically, $1.1 million to $2.6 million per annum is estimated to be earned by publicly funded research institutions).

The Report concludes that the real value in patents is their role in incentivising innovation and the public-private partnerships that are needed to bring new human gene based therapeutics and diagnostics to market, and that, reflecting changes in patent activity, increasingly the patents involved are those that are not isolated human gene sequence patents.

 

Comment

 

The Supreme Court of the United Stated recently held in Association for Molecular Pathology v. Myriad Genetics, Inc. that isolated naturally occurring DNA sequences are not patent eligible (see our previous blog post here).

 

In light of the findings of the Report, it may be that this decision (and the outcome of the Full Federal Court appeal in the Australian Myriad Genetics proceedings – see our previous blog post here) will not have a large impact on the biotech industry in the future, as isolated naturally occurring DNA sequences appear to be playing a diminishing role in the patent landscape since the Human Genome Project was completed in 2003.

US Supreme Court finds naturally occurring DNA sequences are not patent eligible

Posted by Mellissa Lai and John Fairbairn

The Supreme Court of the United States today held in Association for Molecular Pathology v. Myriad Genetics, Inc. 569 U.S. (2013) that isolated naturally occurring DNA sequences are not patent eligible. This may have implications for analogous proceedings, which are on foot in Australia.

Australian litigation

The Federal Court of Australia held in February of this year that isolated naturally occurring DNA and RNA are patentable subject matter (see our previous blog post here).   That decision considered Myriad Genetics Inc's (Myriad) Australian patent no. 686004, which relates to a gene associated with human breast and ovarian cancer known as the 'BRCA1' gene.   The decision is the subject of an appeal to the Full Court of the Federal Court.

US Supreme Court decision

Myriad's US patents have also been the subject of litigation, which ultimately resulted in an appeal to the Supreme Court of the United States. In its unanimous decision delivered on 13 June 2013, the Court rejected the argument that isolating a DNA sequence from the rest of the chromosome is patent eligible. As the Court stated:

"To be sure, [Myriad] found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention" at page 12.

However, the Court drew a distinction between naturally occurring DNA and complementary DNA (cDNA) sequences. The DNA of genes in the body contain 'coding' and 'non-coding' regions. The body reads the whole sequence and cuts out the 'non-coding' portions to make a related sequence known as mRNA that the body can then go on to read and make proteins. cDNA can be made in a lab by copying the mRNA back into DNA. Therefore the cDNA contains only the 'coding' regions, as the 'non-coding' portions were cut out earlier in the mRNA. In short, cDNA is something new, created with human effort and is not a 'product of nature'.

The Court held that the BRCA cDNA was patent eligible. The Court commented that in some instances, even cDNA molecules may not be patent eligible if it is indistinguishable from a naturally occurring sequence. This may occur if a DNA sequence is so short that it consists only of 'coding' regions, meaning that the mRNA did not have any work to do in cutting out the 'non-coding regions' resulting in a cDNA sequence that is identical to the naturally occurring DNA sequence.

The Court emphasised what its decision did not represent – that is, it does not consider the patentability of DNA which has been altered in other ways, such as by scientifically altering the naturally occurring nucleotides. It is also important to note that, like the Australian case, it does not consider any other aspect of patentability (eg. novelty, obviousness) and did not consider any methods of analysis of the human genome.

Comment

In relation to the Australian proceedings, with the appeal set to be heard on 7 August 2013, it will be interesting to see if the Federal Court takes a similar approach.

Given the narrow scope of the decision, its implications for the biotech industry is fairly limited.   For Myriad Genetics, while its claims over isolated, naturally occurring DNA sequences are now invalid under US law, it has maintained its exclusive rights over the cDNA sequences.   Consequently, competitors of Myriad may be able to offer genetic testing for the BRCA1 and BRCA2 genes provided the relevant cDNA molecule is not used.

Software patents: some recent international developments (and their repercussions for Australia)

Posted by Ella Biggs and Paul Kallenbach

Recent developments in New Zealand and the United States highlight some of the issues that arise in seeking patent protection for software and computer programs.

In Australia, software is a 'patentable invention' for the purposes of section 18 of the Patents Act 1990 (Cth), provided that it is:

• a manner of manufacture;
• novel and involves an inventive step when compared with the prior art base as it existed before the priority date of the claim;
• useful; and
• not the subject of 'secret use'.

Courts in Australia have found that software meets the requirements of section 18 if the invention has some practical or material effect, as recently reflected in the Federal Court's decision in Research Affiliates LLC v Commissioner of Patents [2013] FCA 71 (covered in a previous blog post).

However, impending changes to patent legislation in New Zealand, as well as uncertainties raised by recent US Federal Court judgments regarding how to approach the patentability of software, may have future implications for software patents in Australia.

Legislative developments in New Zealand

New Zealand is in the process of updating its patent regime by replacing the Patents Act 1953 (NZ) (NZ Patents Act) with new patent legislation (Patents Bill).

Under the current NZ Patents Act, computer programs are patentable.  A Report of the Commerce Select Committee in 2010 advised the Government to remove the ability for computer programs to be protected by patent law.  There has been uncertainty in New Zealand regarding whether the Government would accept this recommendation.  This uncertainty was seemingly addressed on 9 May 2013, when the Commerce Minister, Craig Foss, released a supplementary order paper clarifying this issue, following intense pressure from the IT industry.

The supplementary order paper inserts clause 10A into the NZ Patents Act, which provides that 'a computer program is not an invention and not a manner of manufacture for the purposes of this Act'. An invention will be a 'computer program' where 'the actual contribution made by the alleged invention lies solely in it being a computer program'.

A range of factors will be considered by the courts in identifying the 'actual contribution' of the invention. These factors include: the substance of the claim and the actual contribution it makes, what problem the invention solves or addresses and how it does so, the advantages of solving or addressing the problem in that manner, and any other matters the Commissioner or the court thinks relevant (clause 10A(4), Patents Bill).

The essence of this change relates to whether a computer program is capable of implementing a tangible effect, beyond its primary function as a computer program. The supplementary order paper compares two examples to illustrate this point: one is a computer program which contains a method for improving the performance of a washing machine.  In this circumstance, the actual contribution of the computer program is the new and improved way of operating the washing machine, and thus it is eligible for patent protection.  By contrast, a process for automatically completing legal documents, using conventional hardware (the novel aspect of the claim being the computer program itself) would be ineligible for patent protection.  In this instance, the actual contribution of the claim would lie solely in being a computer program, and the mere execution of a method within a computer does not allow the method to be patented.

It seems, then, that what constitutes an eligible patent claim under these changes will be dependent on whether the actual contribution of the patent lies outside of the computer or, if it affects the operation of the computer, that the contribution is not dependent on the type of data being processed or the particular application being used.  There appears be a requirement for an external or tangible effect of the computer program in order to qualify for patent protection, to which clause 10A(4) of the Patents Bill specifically refers the Commissioner and the courts in determining whether an invention will be considered a computer program.

Judicial uncertainty in the US

In CLS Services Ltd v Alice Corporation Pty Ltd, the Federal Court of Appeals (District of Columbia) was expected to provide a clear determination on the circumstances in which computer software would be patentable in the United States. However, the Court in this case did the opposite: the 10 judges of the Court authored five different judgments, all coming to different conclusions on the circumstances in which software will be eligible for patent protection.

In the US, eligibility for patent protection is based on whether the claimed invention is a new and useful process, machine, manufacture or composition of matter, or an improvement of an existing invention.  The court must be satisfied that the invention does not make a claim to a law of nature, a natural phenomenon or an abstract idea.  In this case, Alice Corporation had developed a computerised trading platform used for conducting financial transactions in which a third party settles obligations between the contracting parties to reduce settlement risk.  Alice Corporation sought patent protection over the software's systems and methods.

The Court delivered a divided opinion on a range of different issues.  In particular, the Court was conflicted regarding whether the computer software was more than an 'abstract idea' and eligible for patent protection.  One judgment (the Lourie judgment) found that the software was ineligible for patent protection as the claim did not more than articulate an abstract idea into computer language. That the software did no more than enable a process to be carried out more efficiently, or by a machine rather than a human, was not enough to make the claim eligible for patent protection.  Without doing more than stating a method or a process, and adding nothing of practical significance to the underlying idea, the software was found ineligible for patent protection.

In a judgment that accepted parts of the Lourie judgment but dissented in parts, the Rader judgment found the system claims eligible for patent protection and the method claims ineligible.  The main distinction between the Rader judgment and the Lourie judgment appears to be in the way the interaction between the computer and the computer program is analysed.  The Rader judgment found that the combination of the computer program and the computer itself had the effect of creating a new machine or outcome.  The abstract idea of avoiding financial risk was found to be integrated into a system utilising machines by the operation of the computer program, creating a new and practical effect.

Although there were various other bases for disagreement between members of the Court, this distinction between the two main judgments regarding the way computer programs interact with computers, and how to categorise this interaction, illustrates a fundamental issue in the application of patent law to software.  The inability of the Court to come to agreement regarding the way that computer programs should be categorised, whether as an abstract idea or as having the effect of creating a new machine or outcome, creates uncertainty in the IT industry regarding what software will be eligible for patent protection.

Potential ramifications for Australia

In Australia, software is currently eligible for patent protection.  In IBM v Commissioner of Patents (1991) 33 FCR 218, the Federal Court found that a method and apparatus for producing a curve image was patentable.  This finding was based on the production of the curve being a new application of mathematical methods to computers. 

This reasoning was applied in Research Affiliates LLC v Commissioner of Patents, where using a computer to create a weighted index of assets was found to be ineligible for patent protection.  The facts in this case were distinguished from the IBM case on the grounds that the steps of the patent could have been done manually, and that the role of the computer in the process of creating the weighted index was no more than the use of a computer for a standard purpose. To be eligible for patent protection, it appears then the court will need evidence of a practical application or effect which improves the use of the computer, rather than a computer being used to more efficiently fulfil a task that could have been undertaken by a human.

How the role of computers in producing the 'practical effect' of the patent is categorised will be critical to a finding of patent protection in Australia.

The New Zealand legislature has tried to address the confusion that may arise in making this determination by trying to specify the circumstances in which patent protection will (and won't) be available for computer programs.  Conversely, the US decision of CLS v Alice Corp exemplifies the uncertainty that can arise when a court is unable to clearly determine and articulate the role that computers play in implementing particular computer software.

These US and New Zealand developments highlight an area of potential confusion and uncertainty in Australian law, which software developers should watch with caution.

Termination for convenience clauses - be clear and be aware

Posted by Rosie Johnson and Paul Kallenbach

Termination for convenience clauses are a common enough feature of technology contracts.  But just how convenient are they when a party comes to exercise their termination rights under them?

What is termination for convenience?

Termination for convenience clauses are, as their name suggests, a mechanism that enables one party (or both parties) to a contract to exit the contractual relationship without having to have a reason for doing so.

There are two important things to understand about termination for convenience clauses (also commonly referred to as 'termination without cause' or 'termination at will' provisions).

First, in order for a termination for convenience right to arise, it needs to be expressly provided for in the contract.   Without such a clause, at common law, parties will generally only be able to terminate where there has been a repudiation of the contract; an essential term has been breached; there has been a sufficiently serious breach of an intermediate term; or the contract has become frustrated.

Second, there is still some uncertainty as to a party's contractual power to terminate at will under such a clause.   The case law demonstrates that an unsettled issue when a party exercises its right under a termination for convenience clause is whether that party must act in good faith in doing so.   The interpretation of the contract as a whole, including any restraints on the right to terminate for convenience, will be key factors when determining whether this good faith requirement applies.

Convenience

In Theiss Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd[1], Placer exercised its right to terminate for convenience. The specific clause in the contract was not qualified by an obligation of good faith, and the clause was, according to the Court, 'clear and unambiguous in providing Placer with an absolute and uncontrolled right to termination'. The Court seemed satisfied in this case that no requirement to act in good faith was necessary.

Similarly, in Starlink International Group Pty Ltd v Coles Supermarkets Australia Pty Ltd[2], the Court held that a requirement to act in good faith in exercising a right to terminate for convenience would be inconsistent with the broad terms of the termination for convenience clause where such clause was expressed in clear language and without restriction.   In that case, the clause allowed Coles to terminate 'at any time without a reason' by giving 45 days notice.   Again, no requirement of good faith was implied.

On the basis of these two cases at least, it appears that termination for convenience clauses are, as their name suggests, anything but inconvenient (that is, of course, unless you are on the receiving end of the termination notice).  Unfortunately, however, it appears that there are still some potential traps that can make the exercise of these clauses somewhat fraught.

Inconvenience?

In Kellog Brown & Root Pty Ltd v Australian Aerospace Ltd[3], it was successfully argued that the right to terminate for convenience may be subject to an implied term of good faith.   In that case, Australian Aerospace exercised a right to terminate for convenience in its contract with Kellog Brown.   The only catch was that the clause was exercised at a time when the parties were in the midst of a dispute resolution process, and Australian Aerospace appeared to terminate the contract after pre-empting the likely outcome of the dispute process and the possible success likely to flow to the other party.

Similarly in Sundararajah v Teachers Federation Health Ltd[4], there was found to be a serious question to be tried as to whether a termination for convenience clause could be activated in the absence of good faith.

An obligation to act in good faith will not necessarily be implied into all commercial contracts.[5] As with any implied term, it must satisfy a five part test:[6]

• the term to be implied must be reasonable and equitable;
• the term must give business efficacy to the contract;
• the term must be so obvious that it goes without saying; 
• the term must be capable of clear expression; and
• the term must not contradict any express term of the contract.

The precise content of the obligation to act in good faith is also unclear. We know from the case law that it is not an obligation to act in the interests of the other contracting parties, nor to subordinate the party's own legitimate interests to those of the other contracting parties.[7] We also know that the duty to act in good faith imposes an obligation not to act capriciously.[8]

So does the right to terminate under a termination for convenience clause need to be exercised in good faith?

In Apple Communications Ltd v Optus Mobile Pty Ltd[9], Apple entered into a distribution agreement with Optus for a term of three years.   Less than 12 months into the contract, Optus gave notice purporting to terminate under a termination for convenience clause in the agreement.   Prior to entering the agreement, Optus had concerns about its distribution arrangements and was contemplating a restructure which would cancel all contracts.   Apple claimed Optus had breached its implied term of good faith by not communicating to Apple that fact prior to entering the contract. Windeyer J found for Optus, noting that even though Optus had known about the issues, that does not necessarily mean they breached their obligations of good faith when they sought to terminate the agreement when there was 'a proper reason to exercise those rights'.[10]   His Honour went on to say:[11]

[b]usinesses as large as Optus must constantly be considering changes to their modes of operation and certainly could not be expected to disclose these considerations in a way which might make them public.

Implications

Termination for convenience clauses are often used in Australian technology contracts.  As with any clause in a contract, it is important that the right to terminate for convenience be very clearly expressed.  Unfortunately, it might not end there.  The case law shows that there is at least a possibility that an obligation of good faith may be implied in respect of the exercise of such a termination right. 

Whether this occurs will depend not just on the wording of the contract (considered as a whole), but also the circumstances surrounding the exercise of the termination right.   It would seem prudent, therefore, for a party wishing to exercise such a right to turn their mind to whether a good faith obligation might be implied having regard to such circumstances.

 

[1] (2000) 16 BCL 130.

[2] [2011] NSWSC 1154.

[3] [2007] VSC 200.

[4] (2011) 283 ALR 720.

[5] Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL [2005] VSCA 228.

[6] BP Refinery Western Port v Shire of Hastings (1977) 180 CLR 266.

[7] Sandararajah v Teacher's Federation Health Ltd (2011) 283 ALR 720.

[8] Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903 at [37].

[9] [2001] NSWSC 635 (Apple).

[10] Apple at [19].

[11] Apple at [19].

Corby family in the copyright spotlight

Posted by Cara Friedman, Nicole Reid and Paul Kallenbach

Image courtesy of renjith krishnan

The Federal Court of Australia has found in favour of Schapelle Corby's sister, brother and mother in relation to five photographs published in the book, 'Sins of the Father'.  The book – published by Allen & Unwin Pty Ltd (which was the respondent in the action) and written by journalist Eamonn Duff – attempts to portray Schapelle as a knowing participant involved in her father's drug trafficking.  Neither the publisher nor the writer of the book sought permission from the owners of the photographs to use the photographs in the book.

The law

Generally, the owner of copyright in a photograph is the person who took it (although there are exceptions that may apply where the photograph was commissioned for a private or domestic purpose or created under the terms of an employment agreement with the proprietor of a newspaper or magazine).   As a photograph is an artistic work in which copyright subsists, its owner has the exclusive right (amongst others) to reproduce it, or permit its reproduction, unless the owner grants a licence to another to do so or another person can exercise that right under one of the statutory licences or exceptions set out in the Copyright Act 1968 (Cth) (Copyright Act).

The person who took the photograph also has moral rights in the photograph, including the right to have his or her authorship attributed, unless a defence applies.

The issue

The Court held that the publisher did not have express permission from any of the copyright owners to reproduce the photographs in the book.  The relevant question for the Court was whether Allen & Unwin could reproduce the photographs without this express permission, given that express or implied permission had been given to others to reproduce the photographs for an earlier purpose.

Allen & Unwin withdrew its 'innocent infringement' defence (under section 115(3) of the Copyright Act) during closing submissions.  Nor did it try to argue that it had engaged in fair dealing for the purpose of reporting news.

The photographs

The relevant photographs were of Schapelle Corby and/or her mother, sometimes with others.   Two of them were taken by Rosleigh Rose, Schapelle's mother, who also owned a 25% share in the third photograph, as it had been taken by her late partner, of whose estate she was a 25% beneficiary.   The other two photographs were taken by Michael and Mercedes Corby, Schapelle's brother and sister, respectively.

The evidence was that three of the photographs were initially supplied for use in an article that Mr Duff was writing in 2005 for Fairfax media.  Buchanan J held that no licence existed for reproduction of these three photographs in the book.  Any lawful supply of the photographs (if at all) was limited to the context in which they were initially supplied (ie for use in the article).  His Honour held that the current use had no connection with the previously authorised purpose.

Nor did the Court find that any licence existed in relation to the fourth photograph, which was originally given to Schapelle's friend, who in 2005 had provided it to Mr Holland, a Fairfax photographer, in order to assist Schapelle's case.

In relation to the final photograph, the court found that even if it had been provided as a gift to Mr McHugh or Mr McCauley (the two men in the photo with Rosleigh Rose, who were both later convicted of drug dealing), this would be insufficient, without more, to constitute a licence for its reproduction in the book.

Buchanan J observed that 'the defence mounted was weak to say the least.'  Consent was sought neither by the author of the book, nor the publisher, for copyright clearance.  The Court noted that in these circumstances it was the responsibility of the publisher, not the author, to decide which photographs were reproduced in the book.

Moral rights

The court found that the applicant family members' moral right of attribution had been infringed in relation to four of the photographs, as Allen & Unwin had failed to attribute authorship to them.  There was no evidence to establish the defence (to moral rights infringement) that it was 'reasonable in all the circumstances' not to identify the author on the basis of industry practice (this was especially so given that authorship of some photographs in the book was attributed) or any other of the defences available in the Copyright Act.

Orders

The Court granted an injunction prohibiting Allen & Unwin from further reproduction of any of the five photographs, and ordered destruction of any copies of the book in its possession.

The Court did not assess compensatory damages on the basis of what the copyright owners may have accepted as a licence fee, as the evidence was that they would not have given permission to use the photographs in the book.  Instead, damages of $9,250 were awarded, based on the commercial significance of each photograph and its relevance to the central themes of the book.  For example, damages of $5,000 were awarded for infringement of the copyright in one of the photographs, due to its prominence on the back cover of the book and its focus on the relationship between Schapelle and her father, a central theme of the book.

Acknowledging the need for deterrence (both general and specific) and marking its disapproval of such 'flagrant disregard' for the applicants' rights, the Court awarded the applicants additional damages of $45,000.   It would appear that the Court's perception of the copyright infringement as a 'conscious, calculated business decision' by the publisher provided the necessary impetus for this additional damages award.

In relation to the four relevant photographs, the Court made only a declaration of moral rights infringement.   Neither damages nor an apology was ordered, as no loss – neither commercial nor personal – was considered to have resulted from the lack of attribution.   Schapelle's family members wanted no association with the book at all, including by being attributed as authors of the photographs.   Accordingly, Buchanan J labelled the moral rights infringement as 'more a question of form than substance'.

This case does not establish any new law.  It does, however, remind publishers that it is their responsibility to seek copyright clearance prior to publishing photographs, and not to rely on unwritten permissions granted to others, the scope of which is unclear and may not cover later uses.   It is also a rare case that considers moral rights issues (although the infringement issues were not considered in great detail), though it seems the conclusion here is that a finding of moral rights infringement may not help applicants obtain a larger award of damages.