COPYRIGHT TRIBUNAL OF AUSTRALIA

Application by Meltwater Australia Pty Ltd [2019] ACopyT 1

File numbers:

CT 2 of 2017

CT 1 of 2018

CT 2 of 2018

The Tribunal:

GREENWOOD J (PRESIDENT)

Date of decision:

18 March 2019

Legislation:

Copyright Act 1968 (Cth), s 160

Date of hearing:

12 February 2019

Date of last submissions:

14 February 2019

Category:

No Catchwords

Number of paragraphs:

45

Counsel for the Applicant in CT 2 of 2017:

Mr J Hennessy SC with Ms F St John

Solicitor for the Applicant in CT 2 of 2017:

Baker McKenzie

Solicitor for the Applicant in CT 1 of 2018

Corrs Chambers Westgarth

Counsel for the Applicant in CT 2 of 2018:

Ms L Thomas

Solicitor for the Applicant in CT 2 of 2018

Clayton Utz

Counsel for the Respondent in all matters:

Mr C Dimitriadis SC and Ms E Whitby

Solicitor for the Respondent in all matters:

MinterEllison

COMMONWEALTH OF AUSTRALIA

Copyright Act 1968

IN THE COPYRIGHT TRIBUNAL

CT 2 of 2017

application by:

MELTWATER AUSTRALIA PTY LTD (ACN 121 849 769)

BETWEEN:

MELTWATER AUSTRALIA PTY LTD (ACN 121 849 769)

Applicant

AND:

COPYRIGHT AGENCY LIMITED (ABN 53 001 228 799)

First Respondent

ISENTIA PTY LIMITED (ACN 002 533 851)

Second Respondent

TRIBUNAL:

GREENWOOD J (PRESIDENT)

DATE OF ORDER:

18 MARCH 2019

THE TRIBUNAL DIRECTS THAT:

1.    The applicant confer with Isentia Pty Limited, Streem Pty Limited and the first respondent with a view to reaching agreement about the procedural orders which will enable this application and Applications CT1 of 2018 and CT2 of 2018 to be heard together, having regard to the decision of the Tribunal today.

2.    Isentia Pty Limited is removed as a party to this application.

3.    These directions and the reasons for decision are published electronically from the Chambers of the President of the Tribunal, the Hon Justice Andrew Greenwood.

COMMONWEALTH OF AUSTRALIA

Copyright Act 1968

IN THE COPYRIGHT TRIBUNAL

CT 1 of 2018

application by:

STREEM PTY LIMITED (ACN 600 621 627)

BETWEEN:

STREEM PTY LIMITED (ACN 600 621 627)

Applicant

AND:

COPYRIGHT AGENCY LIMITED (ABN 53 001 228 799)

Respondent

TRIBUNAL:

GREENWOOD J (PRESIDENT)

DATE OF ORDER:

18 MARCH 2019

THE TRIBUNAL DIRECTS THAT:

1.    The applicant confer with Isentia Pty Limited, Meltwater Australia Pty Ltd and the respondent with a view to reaching agreement about the procedural orders which will enable this application and Applications CT2 of 2017 and CT2 of 2018 to be heard together, having regard to the decision of the Tribunal today.

2.    These directions and the reasons for decision are published electronically from the Chambers of the President of the Tribunal, the Hon Justice Andrew Greenwood.

COMMONWEALTH OF AUSTRALIA

Copyright Act 1968

IN THE COPYRIGHT TRIBUNAL

CT 2 of 2018

application by:

ISENTIA PTY LIMITED (ACN 002 533 851)

BETWEEN:

ISENTIA PTY LIMITED (ACN 002 533 851)

Applicant

AND:

COPYRIGHT AGENCY LIMITED (ABN 53 001 228 799)

Respondent

TRIBUNAL:

GREENWOOD J (PRESIDENT)

date of order:

18 MARCH 2019

THE TRIBUNAL DIRECTS THAT:

1.    The applicant confer with Meltwater Australia Pty Ltd, Streem Pty Limited and the respondent with a view to reaching agreement about the procedural orders which will enable this application and Applications CT2 of 2017 and CT1 of 2018 to be heard together, having regard to the decision of the Tribunal today.

2.    The applicant submit proposed procedural orders arising out of discussions between the parties referred to in Direction 1 to the Associate to the Hon Justice Greenwood as soon as reasonably possible.

3.    The applicant submit proposed final draft interim orders giving effect to the decision of the Tribunal published today and the decision of the Tribunal made on 16 November 2018 to the Associate to the Hon Justice Greenwood as soon as reasonably possible.

4.    These directions and the reasons for decision are published electronically from the Chambers of the President of the Tribunal, the Hon Justice Andrew Greenwood.

REASONS FOR DETERMINATION

GREENWOOD J (PRESIDENT):

1    These proceedings were listed for directions on 12 February 2019. Two matters arose for consideration. The first concerns procedural orders for the conduct of each proceeding in a way which enables all three matters to be heard together. All parties agree that all three proceedings ought to be heard together. However, there is disagreement about the order in which particular steps should occur. The timing for taking particular steps is affected by the dates available for conducting the hearing. The Tribunal’s preference is that once the hearing commences, the Tribunal should sit continuously until the conclusion of the hearing rather than sitting intermittently with the inevitable dislocation that would then occur.

2    The second matter concerns the question of resolving the final terms of the interim licence to be granted to Isentia Pty Limited (“Isentia”) arising out of the Tribunal’s decision on 16 November 2018 on the interim application by Isentia for an interim licence. It is truly unfortunate that the terms have not yet been agreed. Resolving the final terms of the interim licence became problematic from Isentia’s point of view due to the matters set out in Mr Fairbairn’s affidavit of 18 December 2018 and, particularly, the matters set out at paras 16 to 27 of that affidavit.

3    As to the first matter, the Tribunal’s inquiries are such that a panel will not be able to be convened to sit continuously in November or December 2019. The hearing will be allocated dates in early March next year commencing, if possible, on Monday, 2 March. The solicitors for the parties are requested to contact my Associate and indicate the dates in March next year when counsel will be available (if at all) and the best informed estimate of the parties as to the likely period of the hearing.

4    The Tribunal will take all those matters into account before allocating the March dates.

5    I will address the second matter concerning the Isentia interim licence first.

6    On 16 November 2018, in determining the rate or interim licence fee to be paid by Isentia, having regard to the Tribunal’s earlier discussion in the decision about material textual differences in the character of the rights granted to, and exercised by, Meltwater Australia Pty Ltd (“Meltwater”) on the one hand, and the rights the subject of the “2016 Isentia Licence” as that term is defined in the Tribunal’s decision (and the extension arrangement) on the other hand, the Tribunal said this at [102] to [105] of the decision:

102    If the textual differences in each of the licence arrangements with Isentia and Meltwater as to the grant of rights are, in fact, material, it seems to me that those material differences can be smoothed out by establishing, on an interim basis, terms of a licence by CAL to Isentia on the same terms as the licence granted to Meltwater, as to the character of the rights granted to each licensee. Isentia says that it is willing to be put on the same footing as Meltwater as to that matter. Once a licence is granted to Isentia in respect of the same class of rights licensed to Meltwater, it would seem to follow that there ought to be a licence fee payable by Isentia, during the interim period, which reflects the same licence fee paid, in substance, by Meltwater.

103    CAL recognises that there ought to be, in the long term, an industry wide licence on industry wide terms common to all licensees. An interim licence on the footing just described is, in some senses at least, a step along the way to recognising the importance of common terms as between CAL and licensees although, of course, there will be a great debate about how the rights are to be valued and how the Licence Fee is to be framed in a way which reflects the proper value to be attributed to the rights exercised by the licensees. That debate will, no doubt, take account of all of the things Mr Fairbairn addresses in his affidavit concerning the changing nature of the industry and the various methodologies to be adopted in attributing value to these very important rights for the rightsholders.

104    The qualification upon this approach as to an interim licence is that whilst such an approach establishes common terms based on the Meltwater licence (as to the character of the rights granted under each licence and related matters) which has the effect of addressing contended material differences in the rights conferred upon each licensee (said to be the contended foundation for differential licence fees), prejudice also flows to CAL because, in the interim, it will be deprived of the cash flows referable to the Licence Fee protocol set out in the current CAL/Isentia Licence had that licence simply been extended on an interim basis until the determination of Isentia’s application along with the other applications. Although an interim licence on the basis suggested addresses the contended prejudice flowing to Isentia, it is also necessary to address the prejudice to CAL in being deprived, on an interim basis, of the full amount of the licence fee formulation based on the 2016 Licence (which, of course, had expired on 30 June 2018), had that licence continued on an interim basis reflecting the same formulation of the Licence Fee. The difference between the effective or actual licence fee paid by Isentia and that paid by Meltwater is the amount at #45.

105    In order to provide CAL with some relief from what would be the deprivation of the full difference at #45, the per clip licence fee to be paid by Isentia is to be the amount at #46. A per clip rate at that amount goes some way at least towards smoothing out the differential rate as between Meltwater and Isentia and yet provides a continuing contribution to CAL’s cash flow deprivation that would occur if the per clip rate was merely the amount at #44.

[footnotes omitted]

7    In making those observations, the Tribunal understood the position to be that Meltwater was paying Copyright Agency Limited (“CAL”) a “Press Clip” fee in the amount at Item 44 of the Confidential Schedule (“CS”) to the decision, resulting in a preferential rate to Meltwater as compared with Isentia of the amount at Item 45 of the CS which informed the Tribunal’s selection of the Isentia interim fee in the amount at Item 46 of the CS. That interim fee was determined as a result of the balancing exercise described at [102] to [105].

8    The difficulty that has now emerged is that Mr Fairbairn filed an affidavit affirmed on 18 December 2018 (the date of the directions hearing allocated to review any outstanding issue concerning resolution of the interim terms) in which he says that it was only on 20 November 2018 that he became aware that more than two years earlier on 5 October 2016 CAL had sent a letter (by Lucinda Gardiner) to Meltwater (David Hickey) giving Meltwater notice of a variation to the Press Clip rate which would take effect from 1 July 2016 (the “Variation Rate”).

9    The Press Clip rate was to decrease significantly below the rate at Item 44 of the CS thereby extending the differential recited at Item 45 of the CS. I will not mention the amount of the differential because, as based on CAL’s 5 October 2016 letter, there are confidentiality issues.

10    CAL’s letter of 5 October 2016 struck its own internal balance because the notice of a variation to the Press Clip rate had the effect of decreasing the Press Clip rate and increasing the “various Downstream rates for full text clips”.

11    However, it turns out that CAL’s CEO, Adam Suckling, says that CAL applied the new Press Clip rate from “about January 2017” (not 1 July 2016). Meltwater’s Press Clipping Service Licence Newspapers and Magazines: Copying and Communication Rights (being the document at JIF-3 to Mr Fairbairn’s 5 April 2018 affidavit) is dated 12 October 2015. It provides for a Meltwater Press Clip rate in the amount at Item 44 of the CS (the “Meltwater Clip rate”). That licence came to an end on 30 November 2017. However, Meltwater and CAL put in place further interim licence arrangements. Meltwater, in its Statement of Points in Support of Interim Orders filed on 14 March 2018 agitated for a licence which reflected the Meltwater Clip rate. Presumably, Meltwater was acting on the basis that that rate was the prevailing rate. Otherwise, one imagines it would have agitated for the rate reflected in CAL’s letter of 5 October 2016.

12    The Tribunal’s orders of 23 May 2018 in the Meltwater interim application provided for the grant of an interim licence to Meltwater on terms including the Meltwater Clip rate. In doing so, the Tribunal acted on the footing, as it did in the Isentia matter on 16 November 2018, that the prevailing Meltwater Clip rate was the particular nominated amount (being the same amount set out at Item 44 of the CS).

13    However, as everyone now knows, that was not so. Adam Suckling says that the new rate (that is, the Variation Rate) payable by Meltwater applied from about January 2017 until 30 November 2017 and then the Variation Rate also applied from 1 December 2017 to 30 September 2018. It follows that the distortions in the market due to these differential rates are likely to have been much more pronounced than first appeared to the Tribunal on the basis of the incorrect evidence.

14    Mr Fairbairn says (which I accept) that at the time of preparing his earlier affidavit material concerning this issue, the person instructing him on behalf of CAL was not aware of Ms Gardiner’s letter of 5 October 2016, as extraordinary as that may seem.

15    Not surprisingly, Isentia is concerned about the inaccuracy which has recently emerged in the Meltwater Clip rate having regard to the considerations reflected in the Tribunal’s decision of 16 November 2018 based on the scope of the debate before the Tribunal on the differential positions between Isentia and Meltwater.

16    Mr Suckling says that Ms Gardiner’s letter of 5 October 2016 implementing the change was “sent in error” because it was sent “in isolation from other proposed changes to Meltwater’s future licence” and those changes were intended to reflect “broader amendments or renegotiations to the MMO [Media Monitoring Organisations] licences with minimum guarantees”.

17    Mr Suckling says that the “Downstream Component” rates set out in Ms Gardiner’s letter reflect CAL’s current downstream rate card applied to all full service MMOs licensed by CAL. Mr Fairbairn says that had CAL applied the Meltwater Clip rate rather than the Variation Rate between 1 December 2017 and 30 September 2018, Meltwater would have paid the additional amount set out in Confidential Annexure JIF-5 to Mr Fairbairn’s affidavit of 18 December 2018.

18    Mr Fairbairn says that upon becoming aware of the inaccuracy in the Meltwater Press Clip rate, MinterEllison, for CAL, wrote to Baker McKenzie, for Meltwater, on 26 November 2018 saying that the Variation Rate in the letter of 5 October 2016 does not apply to the Interim Press Clipping Licence (as determined by the Tribunal). Rather, the amount at Item 44 of the CS applies. However, the Item 44 CS rate would apply “prospectively” from 1 December 2018. The letter says that for the period 1 December 2017 to 30 November 2018 a reconciliation would occur as part of a reconciliation to be undertaken consequent upon the Tribunal’s final decision in the matter overall. I assume that Meltwater, until the letter of 26 November 2018 (and perhaps in spite of it), has been paying (and would want to keep paying) the Variation Rate. MinterEllison sought a response to its letter by 28 November 2018.

19    Baker McKenzie responded by saying that a response would not be possible by 28 November 2018 and that instructions were being sought.

20    MinterEllison, on 11 December 2018, sought a response from Baker McKenzie by 12 December 2018. Baker McKenzie said that the firm expected to have instructions by 13 December 2018. MinterEllison pressed for a response on 17 December 2018. On 18 December 2018, Baker McKenzie restated the question: Is CAL applying the (Item 44, CS) rate from 1 December 2018 subject to a later reconciliation? Is CAL also relying on the increased 5 October 2016 Downstream Component Rates? Baker McKenzie sought an answer to those two questions so that the firm might “seek to obtain instructions from [Meltwater]”.

21    At the directions hearing on 12 February 2019, Isentia still did not know whether Meltwater accepts that the Item 44 CS rate is the relevant Meltwater Press Clip rate or whether Meltwater contends that the Variation Rate applies. Isentia says that the state of affairs on this topic is unsatisfactory.

22    The Tribunal agrees. It is unfortunate that: the real facts were not made plain about Meltwater’s actual Press Clip rate in the course of the Meltwater and Isentia proceedings respectively; that between 26 November 2018 and 12 February 2019 Meltwater’s position has not been made very clear in this age of instant contact and communication; and, that time has been wasted in not bringing the final resolution of the terms of the Isentia interim licence to fruition by the date of the earlier directions hearing.

23    In light of these uncertainties, the Tribunal asked Mr Hennessy SC, for Meltwater, whether he had anything to say on this topic. Mr Hennessy said that he had not seen any material on this issue and thus he had nothing to say on the topic.

24    In order to deal with this problem of the inaccuracy in the Meltwater Press rate leading to uncertainty on the rate as actually applied, counsel for Isentia, Ms Thomas, says that Isentia’s interim position can be preserved so far as the interim licence is concerned by adopting proposed Note 10(a) as part of the proposed Interim Orders to be made in the Isentia matter. Note 10(b) is designed to accommodate a review after three months. CAL agrees with proposed Note 10. The Tribunal is minded to incorporate Note 10 in its entirety.

25    As to the Press Clipping Licence (Confidential Attachment A to the proposed interim orders) and the “Scraping Licence” (Confidential Attachment B to the proposed interim orders), Isentia and CAL agree, by proposed Order 2(c) that cls 4.6 to 4.8 and 10.2 do not apply, or do not form part of, the interim licences. However, they disagree about whether cl 4.9 is to apply or not. Isentia says that cl 4.9, drawn from the Meltwater licences, should apply. CAL says that it should not. Although the terms of the licences are confidential, nothing seems to be given away by noting in these reasons that cl 4.9 provides that CAL shall not offer a licence on the terms of the particular licences or similar terms to any other organisation for a fee lower than the rate specified in the document unless CAL has first offered Isentia a fee at that lower rate.

26    The very nature of interim arrangements is such that there will be (and are) differential arrangements as to the terms of licences granted by CAL to particular licensees (at least until the Tribunal’s decision is reached on all these matters). The question of the terms of any interim licence as determined by the Tribunal or any ongoing consideration of a change to the terms of an interim licence must take account of all the contextual factors relevant to the exercise of the power under s 160 of the Copyright Act 1968 (Cth) having regard to the principles guiding the exercise of the discretion. The Tribunal is now seized of the supervision of the interim licences including the Meltwater interim licence and the Isentia interim licence. Isentia’s interests are best protected, in the current setting, not by cl 4.9 but by making the following further orders as Orders 9 and 10 of the proposed orders with the draft Order 9 becoming Order 11. The orders are these:

9.    CA is to notify the solicitors for Isentia, as soon as reasonably possible upon the resolution of the inquiries, of the resolution of the inquiries conducted between MinterEllison for CA commencing with MinterEllison’s letter dated 26 November 2018, and Baker McKenzie for Meltwater as to the Press Clip rate Meltwater is to pay for the Press Clip Licence and the date from which the rate applies, and the Downstream Component rates to apply and the date from which those rates apply.

10.    CA is to advise the Tribunal of the matters the subject of Order 9 as soon as reasonably possible upon the resolution of the relevant inquiries.

27    Accordingly, cl 4.9 will not form a clause of either Attachment A or Attachment B to the proposed orders and Order 2(c) is to refer to cls 4.6 to 4.9 and 10.2.

28    Clause 4.3 of the proposed Scraping Licence is also contentious.

29    Isentia says that cl 4.3 appears in the same language as it appears in the Meltwater Licence (“ML”) except that the names or titles of the corresponding Isentia services have been substituted for the names or titles of the Meltwater services. The relevant Isentia services are a “press contacts database” service called “Connect” (cl 4.3(b)) and “data analysis services” which, when involving “Licensed Works” are provided only to “Mediaportal Customers” (cl 3.4(c) and (e)). The service so provided to Mediaportal Customers is a free service. It therefore has no revenue stream.

30    Isentia says that the cl 4.3(a), (b) and (c) expression of those services not falling within the Isentia services, is analogous to the carve-outs from the Meltwater services in the ML at cl 4.3. In the ML, cl 4.2 sets out Licence Fee obligations being a fixed amount for the first seven months; the greater of a nominated amount for the year ending 30 June 2016 or a nominated percentage of gross revenue from Scraping Services offered to the public as “Meltwater News”; and a similar formula with different numbers for the year ending 30 June 2017 and a period ending 30 November 2017, respectively.

31    Clause 4.3 of the ML then goes on to say, as a matter of clarification, that the Meltwater services to which the revenue calculations of cl 4.2(b) and (c) apply, being “gross revenue from Scraping Services offered to the public as Meltwater News”, do not include three particular services. The particular exempted service at cl 4.3(a) of the ML is adopted at cl 4.3(a) of the proposed Isentia Licence except that Meltwater calls its service “Meltwater Buzz” whereas Isentia does not attribute a name to its equivalent.

32    Clause 4.3(b) of the ML is adopted at cl 4.3(b) of the proposed Isentia Licence except that Meltwater calls its service “Meltwater Press” whereas Isentia calls its service “Connect”.

33    Again, the service description at cl 4.3(c) of the ML is adopted at cl 4.3(c) of the proposed Isentia Licence with no “branding” attached by either Meltwater or Isentia to the service except that given by cl 4.3(e) of the ML, Meltwater warrants that when its cl 4.3(c) service includes any Licensed Works, those services are provided only to “Meltwater News Customers” whereas the proposed Isentia Licence describes its customers as “Mediaportal Customers”.

34    CAL says that its difficulty with the Isentia version of cl 4.3 is that CAL does not have sufficient information about the scope of the services falling within the descriptions “Connect” and “Mediaportal Customers” to determine whether the proposed exceptions in cl 4.3 are appropriate or not. CAL says that Isentia will not provide any further information about the services falling within those descriptions. Isentia says that nothing turns on the description “Connect” and the term can be deleted from cl 4.3(b). Accordingly, I will make that order.

35    As to the reference to Mediaportal Customers, I am not satisfied that adopting that term in cl 4.3(e) as it cross-relates to cl 4.3(c) is particularly problematic. Nevertheless, I will direct that CAL provide Isentia with a clear statement of its understanding of what services are provided by Meltwater by reference to the term “Meltwater News Customers” in cl 4.3(e) of the ML and Isentia will be directed to advise CAL of the services it provides by reference to the description “Meltwater Customers”.

36    Otherwise, cl 4.3 is to be adopted in the terms as formulated but excluding the reference to “Connect” in cl 4.3(b).

37    The remaining question concerns an objection which is taken by CAL to proposed Note 11. Isentia seeks to incorporate, within the protective prohibitions, a recognition that CAL will not seek orders giving effect to a determination of the interim licence to the extent that it would render Isentia’s conduct during the interim period otherwise authorised by the interim licence, an infringement of copyright. CAL accepts that such a note ought to be adopted except that it objects to the extension brought about by incorporating the phrase “or breach of contract”. Isentia says that it does not seek to bring about a result that CAL is concerned about by reference to that phrase and is content to delete it.

38    Accordingly, the draft orders will adopt proposed Note 11 without reference to the phrase “or breach of contract”.

39    The proposed orders incorporate an order enabling the parties to have liberty to apply on five days’ notice including an application to seek a variation of the terms of the interim licences. That provision is appropriate and might well be invoked in light of that which emerges by reason of the orders described at [26] of this decision.

40    All of the matters discussed at [6] to [39] of this decision are concerned with the form of the final orders for the interim Isentia Licence.

41    As to the first matter concerning the procedural orders for the conduct of the matter, it seems clear enough that the procedural orders can sensibly accommodate preparatory steps throughout the balance of this calendar year with a view to being ready to conduct the hearing of all three matters together, in March next year.

42    As a matter of principle, the Tribunal agrees that it is desirable that Isentia put on its Statement of Points in Support of its case on or before a particular date and that the respondent file its Statement of Points in Answer by a particular date. The Tribunal agrees with CAL’s proposed formulation of the sequence of steps in the order identified. However, the particular dates might usefully be revised with a view to fixing a timetable which operates between now and the end of the year recognising that some steps may have already been taken which might need to be taken into account.

43    The Tribunal requests that the Isentia and CAL parties caucus about a revision to the timetable and caucus with the Meltwater and Streem Pty Limited parties so as to bring all three proceedings into conformity with the timetable.

44    The Tribunal will then settle the final form of the orders, upon, upon these being sent to my Associate.

45    Isentia is directed to submit final draft interim orders in relation to the licence issue as soon as possible.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Determination herein of the Honourable Justice Greenwood (President).

Associate:

Dated:    18 March 2019