FEDERAL COURT OF AUSTRALIA

Acohs Pty Ltd v Ucorp Pty Ltd [2012] FCAFC 16

THE COURT ORDERS THAT:

1.    The parties submit within 14 days draft orders giving effect to the reasons for judgment published today.

2.    Leave be granted to the parties to file and serve within 14 days written submissions on the question of costs identified in the reasons for judgment, such submissions not to exceed, in each case, four pages in length.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    Under various legislative regimes in Australia, a manufacturer, importer or supplier (an MIS) of hazardous substances and dangerous goods must provide a material safety data sheet (an MSDS) which sets out prescribed categories of information about the product in question. Employers and the occupiers of certain premises using, or having on site, products of these kinds must have ready access to a copy of the relevant MSDS for each such product.

2    The appellant and the respondents are competitors in the business of producing MSDSs, or providing copies of MSDSs, to MISs and users of the relevant products.

3    This appeal concerns the question of copyright in relation to particular kinds of electronic MSDSs and separate underlying works.

4    Relevantly for the purpose of this appeal, the appellant’s case at trial was that it was the owner of copyright subsisting in each MSDS created by it, and in the source code for each such MSDS, and that the respondents had infringed that copyright. In the case of the first respondent the copyright was alleged to have been infringed by the first respondent reproducing each MSDS and its source code, and supplying or communicating those works, without the appellant’s licence. In the case of the second respondent the copyright was alleged to have been infringed by the second respondent authorising the first respondent’s acts of reproduction and communication, without the appellant’s licence.

5    The primary judge found that copyright did not subsist in the source code or in the MSDSs created by the appellant, except for certain MSDSs that had been authored, as opposed to transcribed, by the appellant’s employees. Although finding that the first respondent had reproduced the authored MSDSs, the primary judge found that these acts had been impliedly licensed by the appellant.

6    In this appeal the appellant challenged the primary judge’s findings that copyright in the source code of the MSDSs and copyright in the transcribed MSDSs does not subsist. It also challenges the primary judge’s finding that the first respondent’s acts in reproducing the MSDSs, whether authored or transcribed by the appellant’s employees, were impliedly licensed by the appellant.

7    The respondents raised a number of contentions to support the judgment below.

8    In order to understand the context in which the appeal is brought, it is necessary to set out some background facts which were the subject of findings by the primary judge. There was no challenge to these findings.

Background

Aspects of the regulatory regime

9    The primary judge (at [2]-[18]) gave a detailed exposition of the relevant legislative requirements for MSDSs as they exist under Commonwealth law and under the various regulatory regimes of the States and Territories. For the purposes of this appeal it is only necessary to record, by way of background, some milestones relating to those requirements, as they pertain to the format and content of an MSDS.

10    The primary judge found (at [3]) that, originally, there was a certain degree of “ad hocery” about that format and content. However, in 1986 the National Occupational Health and Safety Commission established under the National Occupational Health and Safety Commission Act 1985 (Cth) (the NOHSC Act) published a “guidance note” which provided general instructions on how to compile an MSDS, with standard content and format, that was relevant and suitable for use in Australia.

11    In 1994 the National Code of Practice for the Preparation of Material Safety Data Sheets (the 1994 preparation code) was published under the NOHSC Act. It was advisory only. It provided “general guidelines” for the preparation of MSDSs. It identified “core information” (essential information that should be included in an MSDS) and “conditional information” (information that should be included where relevant and available). The guidelines included a “recommended format” for an MSDS. This recommended format came to be known as the “4-section” or “4-header” format for MSDSs, referring to the fact that it comprised four main sections of substantive information.

12    The 1994 preparation code was replaced in 2003 by the National Code of Practice for the Preparation of Material Safety Data Sheets, 2nd edition (the 2003 preparation code). It introduced a “16-section” or “16-header” format for MSDSs. Regulation 6.05(2) of the now Occupational Health and Safety (Safety Standards) Regulations 1994 (Cth) was amended to provide that an MSDS must be prepared in accordance with the 2003 preparation code.

13    The primary judge (at [8]) accepted the following evidence given by Ian Cowie, the director of the appellant:

The [4-header] structure and the 16 Header structure do not dictate the layout presentation and appearance of MSDS. In my experience, MSDS authored in accordance with each structure vary considerably in the way they look by reason of the author’s choice of formatting variables such as heading font sizes, spacing, underlining, type faces, the use of sub-headings and tables and many other variables.

The Infosafe system

14    The Infosafe system is the system by which the appellant authors, transcribes and supplies MSDSs. By using the expression “authors”, we do not seek to imply, without more, the notion of authorship for copyright purposes.

15    The appellant maintains a large relational database called the Central Database (the CDB). The CDB stores all the data required to generate some 200,000 MSDSs. When access to a particular MSDS is required, computer programs call up the necessary components from the CDB and assemble those components so that they are represented on a user’s computer screen as the MSDS of interest.

16    Specifically, the primary judge found (at [24]) that the “technical centre” of the Infosafe system was a computer program written in Visual Basic language (the Infosafe program). The primary judge found that the Infosafe program functions by receiving a request for the generation of a particular MSDS, calling up the data and other elements from the CDB, compiling the relevant HTML source code and sending that code to a user’s computer, thereby causing the MSDS to appear in its intended form on the user’s screen.

17    To this end, the Infosafe program uses routines called “GETHTML”, “Generate_MSDSReport” and “GenerateHTML”. These routines are run by a fourth routine called “WebClass_Start”.

18    Importantly, the primary judge (at [24]) described the source code as follows:

The source code will contain all the content of the electronic document which is to appear on the screen (ie the “data”), as well as the “tags” and other instructions necessary to give a particular layout, presentation and appearance to an MSDS. Thus, for example, the instruction that finds its way into the source code of the MSDS to require a heading to be placed within a box will be an element of the routine. The routine will combine that instruction with data retrieved from the CDB (in this case, the heading itself). The same instruction – to apply the box – will be used time and again with different headings as may be appropriate to the situations of different MSDSs being electronically generated.

19    The Infosafe program was written over the period 1996 to 1998 by a consultant to the appellant, assisted, at least in later stages, by two programmers employed by the appellant. The consultant acted on instructions from Mr Cowie concerning the layout, presentation and appearance which he (Mr Cowie) wanted for the Infosafe MSDSs.

20    The appellant has two commercial applications which enable its customers to view and, in some circumstances, to create an Infosafe MSDS.

21    The first is called Infosafe 2000 Web. This application, which is provided by subscription, allows a user to have online access to the particular MSDSs covered by the user’s subscription. The primary judge (at [29]) described the operation of this application as follows:

Without having to go to the web site of the MIS concerned, the user may call up the MSDS of interest electronically from the CDB. The Infosafe program will then cause the elements of the HTML source code for the MSDS in question to be collected from the CDB, assembled and sent down the line to the user’s computer.

22    The second application is called Infosafe 2000 Client Server (I2000CS). The primary judge (at [29]) described the operation of this application as follows:

In the case of I2000CS, selected elements of the CDB of relevance to the user will, together with the necessary application software, be installed on the user’s own computer, so that the user may view all MSDSs of interest without going on line. I2000CS also contains the editor module, enabling a customer who is the relevant MIS to author its own MSDSs, and to modify an MSDS from time to time, whether the MSDS had been authored originally by it or by Acohs for it. It may, but need not, transfer the data it entered – whether on the original creation of an MSDS or on a variation – to Acohs for inclusion in the CDB.

23    A particular Infosafe MSDS can come into existence in one of three ways.

24    First, it can be created through a process of data entry, which the primary judge (at [25] and [26]) described as follows:

Authoring of MSDSs is a service which Acohs offers to its customers who are MISs. Such authoring is carried out by Acohs employees in the [Professional Services Group] who have qualifications in science or science-related disciplines. The means by which new MSDSs are created by the authors employed by Acohs were explained by one of them, Nga Dam, a chemical engineer who has been employed by Acohs since 2002. To author an MSDS, Ms Dam uses the editor module in the Infosafe software. This program displays a menu of items and categories on Ms Dam’s computer screen, by reference to which the appropriate data are entered. The menu of items reflects the 16 headers in the format for MSDSs mandated by the 2003 preparation code. Each of those items may be expanded to reveal a list – and in some cases a very extensive list – of subheadings. When Ms Dam selects one of the headings or subheadings on the menu, the body of the screen provides the visual environment for the entry of the appropriate data. In some cases, the data will be entered by reference to preset categories, whilst in others a short passage of text must be used. In the latter respect, Ms Dam has access to an extensive collection of standard risk phrases, which are part of the software.

At no stage while Ms Dam is entering data in the way described above does the partially-completed MSDS itself appear on the screen. She is not in the position of someone conventionally writing a new document by way of a word processor, for example. Rather, what appears to her is a series of data-entry screens by reference to which she enters the content that will ultimately make up the MSDS. However, having [completed] the task of entering data for a new MSDS, Ms Dam will exit from the editor module of the Infosafe software, and will call up the completed MSDS on her screen, for the purpose of ensuring “that I had completed the MSDS in accordance with the regulations and that the MSDS is internally consistent and accurate.”

25    The primary judge (at [27]) described the related function of reviewing and updating MSDSs in similar terms.

26    Secondly, an MSDS can be brought into existence by a process of “transcription”. The primary judge (at [28]) described that process as follows:

The second means by which a new Infosafe MSDS might come into existence is “transcription”. Here transcribers employed by Acohs (or, since about 2003, by Acohs (Shanghai) Information and Technology Pty Ltd) will take an existing MSDS (ie a non-Acohs MSDS) and, using the editor module, faithfully enter into the CDB every piece of information which is set out on the existing MSDS. This is because neither Acohs nor the customer for whom it transcribes has the authority to alter an MSDS as issued by the MIS. Thus, when the Acohs version of the MSDS is called up from the CDB, it will be identical in point of content and expression with the original, but will have the general appearance, layout and presentation of all Acohs MSDSs. In his affidavit sworn on 3 July 2008, Mr Cowie provided several examples of MSDSs as issued by the original MIS, and as generated by the Infosafe system after transcription by Acohs’ staff. Appendices 3 and 4 to these reasons are, respectively, the MSDS for a product called “Bettazyme II” as issued by the MIS and the corresponding MSDS generated by the Infosafe System. It will be seen that the layout and appearance of the version generated by Infosafe differs somewhat from the original. There is, however, no difference in the content.

27    Thirdly, an MSDS can be brought into existence by a customer modifying an existing MSDS using the editor module in I2000CS, described above.

28    Mr Cowie gave evidence that the software routines enabling the Infosafe system to generate MSDSs were “continually being updated” and that the two Infosafe 2000 applications were “continually being upgraded”.

The first respondent’s system

29    The primary judge found (at [20]) that when the first respondent “authors” an MSDS for an MIS it creates an electronic document which it stores in an electronic library called “the Collection”. The documents are stored, and can be viewed, in various formats.

30    The primary judge also found that the first respondent obtains MSDSs by other means, which include locating an MSDS on the Internet and downloading it as an entity. Such MSDSs are also stored as part of the Collection. Any non-MIS who might require access to these MSDSs could, under appropriate commercial arrangements with the first respondent, achieve that access. The primary judge found that each such MSDS was identical in content and appearance to the “original” MSDS from which it had been derived.

The HTML source codes as original literary works

The primary judge’s findings

31    In its seventh further amended statement of claim, the appellant claimed that copyright subsisted in “the source code of each of the HTML and PDF files for MSDS rendered by the Infosafe system”: see paragraph 8(a).

32    For reasons given by the primary judge (at [45]), the appellant ultimately confined its claims in this regard to the HTML source code for each MSDS and abandoned its claims for copyright in the source code of each of the PDF files.

33    The primary judge reasoned (at [47]), correctly in our view, that there was no a priori reason to deny a body of source code, such as that described, the status of a literary work. The significant question, however, was whether the HTML source code for each identified MSDS, generated and rendered by the Infosafe system as described, was an original literary work for copyright purposes.

34    The primary judge recorded (at [49]) two submissions by the appellant as to when, in each case, the relevant source code was reduced to material form. His Honour said:

The point at which the need arises to identify the author is (in the case of an unpublished work) the moment when the work is first reduced to a material form or (in the case of a published work) the moment when the work was first published in Australia (IceTV, 239 CLR at 495 [103]). In the present case, Acohs submitted:

The HTML source code for the Infosafe MSDS in Annexure A was in each case reduced to a material form over the period from the writing of the HTML generating routines in the Infosafe System and to the end of the process of creating the particular MSDS so that the HTML source code was able to be generated to enable the MSDS to be viewed. It is during that period that the HTML source code was reduced to a form of storage from which it was capable of being reproduced. That is, it is reduced to a material form for the purposes of the Act: Roland Corporation v Lorenzo & Sons Pty Ltd (1991) 33 FCR 111.

And:

Once the author or transcriber of an MSDS completes the process of authorship or transcription using the Editor Module, they view the completed MSDS on the screen and conduct a formal check to ensure it is accurate and internally consistent. Where the MSDS is viewed by an author or transcriber on the screen in HTML, the completed HTML source code is stored in a file named “Default.htm”. That HTML source code contains other HTML source code that creates internal hyperlinks that are not present in the HTML source code of an HTML MSDS produced by Infosafe 2000 Web or Client Server. For that reason it is not identical to the final HTML source code. However, in order to view the MSDS in HTML it is necessary that the corresponding HTML file exists somewhere in the computer. It is submitted that the HTML source code for each MSDS is stored as a complete source code when the author or transcriber checks the MSDS at the end of the process of authorship or transcription.

Aside from such issues as may arise from the existence of the internal hyperlink referred to in this passage, it is at least clear that Acohs contends that the source code said to be a literary work is first reduced to a material form at the point when the author or transcriber has completed his or her task and checked the appearance of the completed MSDS on his or her screen.

35    The primary judge also recorded (at [54]) the appellant’s submission concerning authorship in relation to the relevant source code. His Honour said:

This leads me to the way that Acohs in fact conducted its case in this proceeding. It did not submit that either the programmers or the authors/transcribers were, alone, the authors of the relevant source code in the copyright sense. Rather, it submitted:

… that the authors of the HTML source code for each MSDS in Annexure A were:

(a)    Danny Lau … and/or Feng Liu Yang … Chien Yu Lee … and Sai Nghi Tran … who were the computer programmers who wrote the “GenerateHTML” routines including the HTML instruction tags that are retrieved by the Infosafe System and placed into the HTML source code for the MSDS; and

(b)    the individual who “authored” or transcribed the data for each MSDS into the Infosafe System.

That is to say, Acohs’ case was one of joint authorship ...

36    The primary judge rejected the appellant’s claim that copyright subsisted in the HTML source code of each identified MSDS as an original literary work for the following reasons.

37    First, it could not be said that the author, for copyright purposes, of the source code for each MSDS was the person who entered data into the Infosafe system; that person did not write the source code either in a “traditional” way or by using a computer. Of those persons, the primary judge said (at [52]):

They were not computer programmers, and there is no suggestion that they either understood source code or ever had a perception of the body of source code which was relevant to the MSDSs on which they worked.

38    The primary judge further reasoned that it was the routines and the Infosafe system that gathered together the elements needed for the source code and then “generated it”. In short, the source code, as a complete work, was not written by any single human author but was generated by the Infosafe program: see at [50].

39    Secondly, the primary judge reasoned that it could not be said that the programmers who wrote the routines and instruction tags in Visual Basic language were the authors of the source code for each identified MSDS. His Honour (at [53]) said:

In my view … it would be artificial to regard the programmers as involved in the task of writing the source code for thousands of MSDSs yet to take a material form merely because they wrote, and amended, the program which, when prompted, would put together a selection of the fragments of source code which they did write with other fragments later contributed by the authors and transcribers.

40    Thirdly, the source code for each identified MSDS was not a work of joint authorship. After noting (at [55]) that the definition of “work of joint authorship” in s 10 of the Copyright Act 1968 (Cth) (the Copyright Act) required the work to have been produced by the collaboration of two or more authors, the primary judge held (at [57]) that it would be quite artificial to say that the programmers, and the “authors” and “transcribers” who entered data into the CDB, collaborated with each other in writing the relevant source code. His Honour (at [57]) said:

The programmers wrote the program which caused the Infosafe system to operate as it did: to generate source code in response to defined inputs by those using the system. They also wrote so much of the source code as caused particular layouts, and appearance attributes, to appear on the user’s screen. However, the essence of their contribution was not the writing of the source code for a particular MSDS. Having written the program by reference to which source code would, under certain conditions, be generated, they had no further contribution (other than to amend the Visual Basic program from time to time). In no realistic sense did the programmers collaborate with every author and transcriber whose efforts directly led to the creation or transcription of an MSDS.

41    In relation to MSDSs that involved contributions by the appellant’s customers, the primary judge (at [62]) identified a further difficulty with the appellant’s case. Even if the programmers and the external “authors” could be considered to be, jointly, the authors of the source code for a particular MSDS, the appellant, not being the employer of all such “authors”, could not rely on s 35(6) of the Copyright Act to claim ownership of any corresponding copyright. It is implicit in the primary judge’s finding in this regard that no evidence of any assignment of copyright by external “authors” was adduced.

42    The primary judge concluded (at [60]) as follows:

Since the source code the subject of para 8(a) of Acohs’ pleading was not the work of any one human author, and was not a work of joint authorship, that code cannot be regarded as an original literary work within the meaning of the Copyright Act.

The appellant’s case on appeal

43    This part of the appellant’s case on appeal is to be found in a single ground of appeal in the amended notice of appeal on which it ultimately relied, expressed as follows:

The Infosafe system generates HTML source code for Infosafe MSDS by the operation of various routines in the system known as “GETHTML”, “Generate_MSDSReport”, “GenerateHTML” and “WebClass_Start” (the HTML routines). His Honour erred in holding that the computer programmers who wrote the HTML routines in the Infosafe system were not authors of the HTML source code of the Infosafe MSDS.

44    That ground, expressed as it is, does not adequately identify error in the primary judge’s ultimate conclusion that the HTML source code of each identified MSDS was not an original literary work for copyright purposes; nor does it adequately reflect the scope of the appellant’s submissions advanced on appeal.

45    As argued, the appellant’s submissions focussed on the primary judge’s ultimate conclusion (at [60]), quoted above, that the source code could not be regarded as an original literary work within the meaning of the Copyright Act.

46    The appellant submitted that this finding involved a number of errors.

47    First, it submitted that the proposition contained in the quoted passage was “not correct”. It sought to elucidate that submission by calling in aid the proposition that, where a literary work is contributed to by the efforts of more than one person, the question of whether any one or more of them has expended sufficient effort of a literary nature to be considered an author of that work is a question of fact and degree: IceTV Pty Limited v Nine Network Australia Pty Limited (2009) 239 CLR 458 at [99]. It submitted, in that regard, that it may be the case that there is no original work; a single original work with one author or joint authors; or there may be “more than one original work comprised in the subject matter”.

48    Secondly, it submitted that the challenged finding proceeded on the erroneous basis that the appellant “in all eventualities” claimed “the entire HTML source code of MSDS[s]” whereas, in certain cases, it asserted copyright only in “that part of the source code that determines the layout presentation and appearance of the MSDS”.

49    Thirdly, it submitted that, although finding that the programmers wrote the HTML instruction tags that were incorporated into the HTML source code and the routines that caused the instruction tags to be assembled into the source code of a particular MSDS, the primary judge, nevertheless, “mischaracterised the nature of the programmers’ contribution”.

Consideration

50    In order to understand the significance of these submissions, it is necessary to bear in mind the particular copyright works which the appellant advanced at trial. Paragraph 8(a) of the seventh further amended statement of claim identified, relevantly for present purposes, the copyright work, in each case, as being the source code of the HTML file for the MSDS rendered by the Infosafe system. The appellant particularised its claims in that regard by reference to a DVD which contained MSDS files “generated and rendered by the Infosafe system”.

51    There can be no doubt that, in putting its case in that way, the appellant was confining its claims to the source code, in HTML format, for each identified MSDS as “generated and rendered by the Infosafe system”.

52    In its particulars, the appellant drew a distinction between MSDSs that had been “authored” or “transcribed” wholly by it (in which it claimed copyright “in respect of all aspects of the MSDS other than the bare unformatted data therein”) and MSDSs “authored” by it and its licensees (in which it claimed copyright in “that part of the source code that determines the layout presentation and appearance of the MSDS”). It pointed to this last-mentioned statement in support of its submission that the primary judge erroneously assumed that it claimed copyright in the entire source code of each MSDS. However, this statement sits oddly – indeed, inconsistently – with the appellant’s identification of the copyright work, in each case, as being the source code generated and rendered by the Infosafe system.

53    In this connection it is to be noted that the source code is generated by routines in the Infosafe program acting in combination to cause elements of the HTML source code for each MSDS to be collected from the CDB and assembled in a form such that, in that particular form of expression, a particular MSDS can be viewed on a user’s computer screen. The appellant’s copyright claims were not directed to each routine, considered as a separate copyright work, or to the separate tags, or to some combination of these discrete elements, but to the specifically assembled, computer-generated works that were, in each individual case, the bespoke HTML source code for a particular MSDS.

54    The essence of the appellant’s case on appeal in this regard was that the HTML source code of each identified MSDS was simply a combination of “MSDS content” (namely, the specific data about a particular hazardous substance entered into the CDB of the Infosafe system by one of the appellant’s employees, agents or customers) and HTML instruction tags that were written into the routines. Thus, when the routines were run and the source code was assembled, it was possible to identify, within the particular source code that was generated, the instruction tags that had originally been inserted into the routines. The end point of this reasoning seems to be that, according to the appellant, copyright subsists in only part of the relevant copyright work, specifically the instruction tags taken from the routines in the course of the Infosafe program compiling the source code with other elements (such as the MSDS content) taken from the CDB.

55    This is a novel proposition. It confuses the copyright work with identifiable elements within it. It is, in reality, no more than an argument of convenience which seems to be inspired by the thought that, in order to prove copyright infringement, it is only necessary to show the reproduction of a substantial part of the copyright work: see s 14(1)(b) of the Copyright Act. However, as Drummond J observed in Coogi Australia Pty Ltd v Hysport International Pty Ltd (1998) 86 FCR 154 at 172, by reference to Lord Reid’s analysis in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 276-277:

What that entity the subject of copyright is in any given case cannot be governed by what the copyright claimant chooses to say it is. It must be a matter for objective determination by the Court. Otherwise a person suing for infringement of copyright could, by narrowing the subject matter of his claim, deprive a defendant of what might be a good defence that what the defendant took did not involve the taking of a substantial part of the true object of the claimant’s expenditure of skill and effort.

The fact that copyright, once established, can be infringed by the copying of something less than the entire work, that is, by copying a substantial part of the whole, does not detract from the basic principle that before an infringement action can succeed, the claimant must, where its claim to copyright is put in issue, prove copyright in the particular entity that constitutes the “work”: Lord Reid pointed out in Ladbroke (Football) Ltd v William Hill (Football) Ltd at 276-277 that it is wrong to conflate the exercise of identifying the subject matter of the copyright claimed with the exercise of determining whether there has been an infringement of the copyright by the reproduction of a substantial part of that subject matter.

56    In the context of literary works that are computer programs, it is possible that a routine, or perhaps even an information tag, if it is original, sufficiently substantial and functionally separate from the entirety of the program of which it forms a part, might constitute a separate copyright work: see the observations in Powerflex Services Pty Ltd v Data Access Corporation (No 2) (1997) 75 FCR 108 at 127. This, however, was not the case pleaded or advanced by the appellant either at trial or on appeal. The fact that, in compiling the HTML source code for each identified MSDS, routines written by the programmers functioned so as to include within the source code information tags written into those routines by the programmers, does not mean that the programmers thereby became the authors of the HTML source code for each particular MSDS. Such reasoning ignores the fact that the HTML source code was its own discrete form of expression, generated by the Infosafe program, which also included data entered into that system with respect to the particular substance to which the corresponding MSDS related.

57    On appeal the appellant sought to invoke the notion that in any given case of a literary work whose creation has been assisted by computer, the question whether the work has been created by a human author or by human authors is one of fact and degree: Telstra Corporation Ltd v Phone Directories Company Pty Ltd (2010) 194 FCR 142 at [118] per Perram J and [169] per Yates J. To this end, we were taken in the course of argument, to an example of the relevant source code. This example simply confirmed the discrete nature of the source code as a separate work created by the operation of the Infosafe program on other elements entered into the Infosafe system. It did not emanate from authors. It was not an original work in the copyright sense.

58    We are not persuaded that the primary judge erred in concluding that the source code of each identified MSDS was not an original work for copyright purposes. Indeed, we agree with the primary judge’s analysis based on the facts as he found them to be.

59    It follows that this ground of appeal must fail.

The MSDSs as original literary works

The primary judge’s findings

60    In its seventh further amended statement of claim the appellant claimed that copyright subsisted in each MSDS that it had identified in “annexures” to that pleading, having its layout, presentation and appearance in accordance with one or other of the templates identified in another “annexure”: see paragraph 8(b).

61    This aspect of the appellant’s pleading marked a departure from a previous allegation, no longer made, that copyright subsisted in the layout, presentation and appearance of each Infosafe MSDS rendered by the Infosafe system.

62    The primary judge once again reasoned (at [65]), correctly in our view, that each MSDS was properly characterised as a literary work within the meaning of the Copyright Act. In this connection the appellant had advanced the case that each such MSDS was a compilation in respect of which information about the substance supplied by the MIS, the appropriate risk phrases and other standard expressions as available in the Infosafe software, any new phrases or expressions that were required to be devised, and the pre-determined visual and organisational elements of the MSDS as governed by the underlying Infosafe program, were brought together to create the particular MSDS.

63    The primary judge found (at [68]-[69] and [73]) that each “Acohs-author” of an Infosafe MSDS (that is, each member of the appellant’s staff who created an MSDS in the first way we have described at [24]) was properly to be regarded as the “copyright-author” of that work, and that such work was an original work in which copyright subsisted. The appellant did not challenge the reasoning that led to that finding. However, the respondents contended that, in reaching that finding, the primary judge departed from the appellant’s pleaded case and, accordingly, erred because the respondents were denied the opportunity to test that case. That is a contention to which we shall return.

64    The primary judge rejected the appellant’s claim to copyright in the MSDSs created by transcription or by the appellant’s customers (that is, those MSDSs created in the second and third ways we have described at [26] and [27]).

65    The primary judge’s reasons for rejecting those claims were as follows.

66    First, unlike the position with an “Acohs-author”, an “Acohs-transcriber” made no original contribution to the MSDS being transcribed. The primary judge (at [70]) said:

Unlike the author, he or she does not select the appropriate sub-headings, and the order in which they should be arranged; and he or she does not select the appropriate risk phrases and the like. Indeed, I do not accept that the process of transcription is a compilation. The transcriber of an MSDS does not bring together different elements from various sources. It was made quite clear that the transcriber must be faithful to the underlying MSDS being transcribed. This being the case, I consider that the transcriber is engaged in the mere task of copying.

67    Secondly, the primary judge noted but rejected (at [71]-[72]) the appellant’s submission that copyright subsisted in the transcribed MSDSs simply because of their layout, presentation and appearance. In this connection it is critical to note that the appellant, by its pleading and in its submissions to the primary judge, specifically disavowed the layout, presentation and appearance of an MSDS as a separate copyright work. It submitted, however, that it owned copyright in each identified MSDS because its employees authored the layout, presentation and appearance of the MSDS.

68    In this connection the primary judge reasoned that transcribers could not be originators of the layout, presentation and appearance of the MSDSs because they had no control over such matters in respect of the MSDSs they transcribed. Furthermore, the primary judge reasoned that the appellant was not assisted by introducing, as it sought to do, the contributions of Mr Cowie and the programmers. The primary judge (at [72]) said:

Given that each MSDS was now alleged to be an original work (ie as contrasted with the original formulation of Acohs’ pleading, in which only the layout, presentation and appearance was alleged to be such a work), it was necessary for Acohs to bring in the transcribers with Messrs Cowie, Lau etc, and to contend that the finished product was work of joint authorship. There are, however, two reasons why this submission should not be accepted. The first is that it would be quite artificial to regard Mr Cowie and the programmers as authors of any one MSDS. That they devised, wrote and later amended the computer program which gave Infosafe MSDSs their particular appearance, as distinct from making any contribution to their content, does not make them authors in the copyright sense. Neither does it give originality to a work which, because it was necessarily copied from something else, would not otherwise be original. The present case is, in relevant respects, quite different from Ladbroke (Football), Ltd v William Hill (Football), Ltd [1964] 1 All ER 465, on which Acohs relied, and from Lamb v. Evans [1893] 1 Ch 218, referred to in Ladbroke. The second reason is that, for the reasons given at paras 52-57 above, Mr Cowie and the programmers could not be regarded as joint authors together with the transcribers. On no fair usage of the language could they be regarded as having collaborated to produce the works constituted by the MSDSs.

69    Thirdly, the primary judge concluded (at [74]) that, by analogous reasoning, the MSDSs authored by the appellant’s customers could not be original literary works.

The appellant’s case on appeal

70    The single ground of appeal on which the appellant proceeded in this regard was expressed as follows:

His Honour erred in holding at [72] that Mr Cowie and/or the computer programmers who wrote the HTML routines were not authors of the MSDS in the copyright sense.

71    The appellant submitted that layout, presentation and appearance may be the subject of copyright protection: Ladbroke; Kalamazoo (Aust) Pty Ltd v Compact Business Systems Pty Ltd (1985) 5 IPR 213; Phone Directories at [102]. Here the appellant submitted that the layout, presentation and appearance of an Infosafe MSDS is determined by templates. The appellant pointed to the primary judge’s findings, and the underlying evidence, that Mr Cowie gave instructions as to the basic layout, presentation and appearance that he wanted for the MSDSs, which were actioned by the programmers writing the code in the Infosafe program that would achieve that outcome.

72    The appellant submitted that the primary judge mischaracterised the evidence in relation to authorship by failing to recognise that part of the original form of expression of the Infosafe MSDSs was their layout, presentation and appearance, and that the primary judge had an unduly narrow appreciation of the appellant’s copyright claim in this regard.

Consideration

73    In our view this ground of appeal cannot be sustained.

74    When considering this ground of appeal it is of central importance, once again, to correctly identify the copyright works in suit.

75    During the course of the trial the appellant abandoned its case that copyright subsisted in the layout, presentation and appearance of each MSDS “rendered” by the Infosafe system, that is, that copyright subsisted in the templates themselves. The primary judge carefully traced the development of the appellant’s copyright claims in this regard (at [31]-[44]); see also the primary judge’s reasons for ultimately allowing the appellant’s pleadings to be amended: Acohs Pty Ltd v Ucorp Pty Ltd (No 2) (2009) 82 IPR 493.

76    In its seventh further amended statement of claim the appellant plainly identified the case it ultimately pursued as one in which copyright subsisted in each identified MSDS which had a layout, presentation and appearance in accordance with one or other identified templates. It is at this point, however, that the appellant’s case at trial, which it repeated on appeal, appears to have adopted a chameleon-like quality. Whilst apparently continuing to eschew a case that the layout, presentation and appearance of each identified MSDS constituted a separate copyright work, and whilst apparently affirming its case that copyright subsisted in each of the identified MSDSs, the appellant sought to argue that copyright subsisted in an MSDS “because its employees authored the layout, presentation and appearance of the MSDSs” and that that was an “original contribution” to each MSDS: see the submissions recorded by the primary judge (at [71]). In putting its case in this way, the appellant appears, once again, to have confused certain elements of the identified MSDSs with the MSDSs themselves.

77    It is trite that the postulated copyright work, as a whole, must be considered in order to see whether it is protected by copyright. When dealing with the question of the subsistence of copyright in the identified MSDSs that had come into existence by way of transcription, the primary judge correctly recognised that his attention must be directed to each MSDS, considered as a whole. Of course, when each Infosafe MSDS is considered in that way, its content cannot be ignored. It is this content which gives each MSDS its essential character as a particular MSDS dealing with a particular hazardous substance.

78    In this connection it is to be noted that, when advancing its case in relation to MSDSs created by Acohs-authors, the appellant submitted that the Acohs-authors were those individuals who brought together the information about the substance supplied by the MIS, including the appropriate risk phrases as available in the Infosafe system or as devised by that author, as well as the pre-determined visual and organisational elements of the MSDS as governed by the Infosafe software. In short, the appellant’s own submissions at trial in relation to those MSDSs recognised that the copyright work must be considered as a whole and that the focus of attention was the intellectual effort of the Acohs-authors. The primary judge (at [65]) recorded those submissions and (at [69]) accepted that the Acohs-author of an Infosafe MSDS should be regarded as the copyright-author of that work. His Honour’s reason for so finding was as follows:

Even in a case in which every verbal and numerical element of an MSDS created by an author was to be found in the CDB, the author was still required to select from the menu of sub-headings those that would be used and those that would be irrelevant (and thus would not be used). The electronic documentary entity which he or she thereby brought into existence was not merely the result of copying from something else.

79    This passage of the primary judge’s reasons must also be considered in light of the passage in [70], which we have quoted above. In that passage the primary judge compared the work of the Acohs-transcribers, noting that those persons did not select the appropriate sub-headings or the order in which they should be arranged; nor did they select the appropriate risk phrases and the like.

80    On appeal there was no challenge by the parties to the correctness of the primary judge’s finding in relation to the work of the Acohs-authors, although the respondents contended that, by so finding, the primary judge departed from the appellant’s pleaded case (a matter to which we shall return). Importantly for present purposes, it is implicit in his Honour’s finding that authorship, for copyright purposes, in each MSDS resided in the Acohs-authors, not those writing the computer programs in the Infosafe system that were used by the Acohs-authors to create a particular MSDS.

81    In expressing his finding about copyright subsistence in the MSDSs brought into existence by the Acohs-authors, the primary judge noted (at [69]) that the electronic documentary entity that was brought into existence (that is, the particular MSDS) was not merely the result of copying from something else. However, for the MSDSs created by the Acohs-transcribers, this was a point of distinction. The primary judge found (at [70]) that the transcribers were not bringing together different elements from different sources. The primary judge found that, properly characterised, the Acohs-transcribers were merely engaged in the task of copying MSDSs that had been compiled by others. There was no challenge to that finding on appeal by the parties.

82    When, at trial, the appellant sought to advance its case on copyright subsistence in relation to the Acohs-transcribed MSDSs, in the way that we have described, the primary judge well understood that the appellant was pressing on him what it regarded to be the necessity of considering the involvement and contribution of Mr Cowie and the programmers in respect of the layout, presentation and appearance of the Infosafe MSDSs.

83    It is in this context that one must consider the primary judge’s statement (at [72]) that Mr Cowie and the programmers who wrote the HTML routines were not “authors in the copyright sense”. Here the primary judge was directing his statement to authorship in respect of the relevant works put forward by the appellant, namely each identified and completed MSDS. His Honour was not addressing some abstract proposition concerning copyright authorship at large.

84    The primary judge properly and carefully distinguished between the question of authorship of each alleged copyright work (that is, each identified Infosafe MSDS) and the separate (and relevantly hypothetical) question of the authorship of the antecedent and underlying works to which Mr Cowie and the programmers were said to have contributed. The primary judge correctly recognised that Mr Cowie and the programmers were not authors of each MSDS created by the Acohs-transcribers simply because they wrote and amended computer programs in the Infosafe system that were used by the Acohs-transcribers, at the time when those transcribers came to do their work in creating, by transcription, each MSDS.

85    The primary judge also correctly recognised that, whatever originality might have been involved in the activities undertaken by Mr Cowie and the programmers in writing the underlying computer programs in the Infosafe system, those activities were separate and distinct from the activities involved in creating each MSDS, including those created by way of transcription. This is why the primary judge stated (at [72]) that the activities of Mr Cowie and the programmers could not confer originality on the MSDSs created by transcription.

86    The primary judge also correctly realised that by advancing the activities of Mr Cowie and the programmers as relevant to the question of copyright subsistence in the MSDSs themselves, the appellant could not avoid the consequence that it was propounding a case that each identified MSDS was a work of joint authorship. For the reasons he gave at [52]-[57] in relation to the similar question arising with respect to copyright subsistence in the HTML source code for each identified MSDS, the primary judge correctly found that it could not be said that Mr Cowie and the programmers collaborated with each Acohs-transcriber to subsequently create each relevant MSDS.

87    The appellant has not demonstrated that the primary judge erred in rejecting the case that copyright subsisted in the identified MSDSs that had come into existence by way of transcription or that had been “authored” by the appellant’s customers.

IMPLIED LICENCE

Introduction

88    After having found that copyright subsisted in the Acohs-authored MSDSs, and after having dealt with a separate issue about whether the appellant had assigned the relevant copyright, in certain cases, to particular MISs (an issue to which we will also return), the primary judge turned to the question of whether the identified Acohs-authored MSDSs had been reproduced by the respondents without the licence of the appellant: see s 36 of the Copyright Act. As we have noted, the appellant’s case, in that regard, was that the first respondent had reproduced the MSDSs and that the second respondent had authorised those reproductions.

89    Although formally denying the allegation that they had “copied … the copyright works”, the respondents do not appear to have strenuously contested the fact that the first respondent had reproduced, in the copyright sense, the MSDSs relevant to this appeal. Indeed, the primary judge recorded (at [87]) that “the respondents did not dispute the proposition that, if the HTML source code was, and if the MSDSs themselves were, original literary works, they had reproduced them in material form”. The primary judge made no separate, express finding about authorisation.

90    The main area of contest was whether the first respondent’s acts in reproducing the MSDSs were done without the appellant’s licence. As finally argued, this defence had two components.

91    First, the onus of proving that the first respondent’s impugned acts were done without the appellant’s licence, rested on the appellant. The respondents contended that the appellant had not discharged that onus. The primary judge (at [131]) accepted that contention. We shall return to consider whether his Honour erred in that regard.

92    Secondly, the respondents contended that the impugned acts were done pursuant to an implied licence granted to the appellant’s customers, that is to say, the MISs who issued the MSDSs created by the appellant. It is necessary to say something more about this component of the respondents’ defence.

93    In their last filed defence, which was before the amendment to paragraph 8(b) introduced by the seventh further amended statement of claim (see above at [60]-[61]), the respondents, in response to the allegation that they had infringed the alleged copyright in the layout, presentation and appearance of each Infosafe MSDS, pleaded that:

(a)    the appellant “has impliedly granted to [the appellant’s MISs] an unconditional, irrevocable licence to use any copyright of [the appellant] in the templates that is [sic] reproduced in the MSDS created by or at the direction of the [the appellant’s MISs]”; and

(b)    “the alleged copyright works were reproduced pursuant to a licence given by [the appellant] to [the appellant’s MISs] to reproduce and licence [sic] the further reproduction of the alleged copyright works for the purpose of ensuring the ready availability and accessibility of the MSDS[s], which licence is to be implied by law and/or so as to give business efficacy to the agreements between [the appellant] and [the appellant’s MISs] with respect to the creation and transcription of MSDS[s] …”.

94    As to the allegation in (b) above, the respondents specifically relied on the following facts, matters and circumstances arising under the State and Territory legislative regimes:

(a)    The MIS of each identified Infosafe MSDS is responsible for ensuring that each MSDS contains accurate and current information and that the MSDS is provided or made available to any person to whom the substance the subject of the MSDS is supplied (other than for retail sale) and to any employer on request for the provision by the employer to its employees.

(b)    Each such MIS who is also an employer to which a hazardous substance (the subject of each identified Infosafe MSDS) has been supplied is responsible for ensuring that it has obtained a current MSDS and made it readily accessible to any employee who has the potential to be exposed to the substance.

(c)    The layout, presentation and appearance of the MSDS is substantially prescribed by the requirements of the 1994 code and the 2003 code.

(d)    The layout, presentation and appearance of each MSDS is also substantially determined by the MIS depending upon the substance that is the subject of the MSDS.

(e)    Each relevant MIS pays the appellant a fee for the appellant to perform the services and/or provide the software applications in relation to the creation of the MSDS in accordance with the MIS’s directions, so as to enable the MIS to meet its obligations referred to above.

95    The point of present relevance is that the implied licence relied upon by the respondents was said to be one granted by the appellant to the particular MIS at whose direction an MSDS was created by the appellant.

96    In its reply, the appellant:

(a)    admitted that “an implied licence exists from [the appellant] to its customers for such customers to use MSDSs for the purpose of compliance with the various regulations but such implied licence goes no further and in particular does not extend to permission for customers to provide such MSDSs to a commercial competitor of [the appellant] at no cost and for such competitor’s own commercial benefit”; and

(b)    admitted that “there is an implied licence to [the appellant’s] customers to view and store such MSDS[s] and make them available to their own customers in order to comply with their obligations under the regulatory regime but nothing more”.

97    In context, the reference in the reply to the appellant’s “customers” must be taken to be a reference to the MIS at whose direction a particular MSDS was created by the appellant.

98    The primary judge treated these parts of the pleadings as extending to the amendment to paragraph 8(b) of the seventh further amended statement of claim. This appears to reflect the manner in which the parties conducted this part of the case. No issue arises on this appeal about his Honour adopting that course. The only question that arises is the scope of the implied licence on which the respondents relied and, in particular, whether the respondents’ impugned acts fell within that scope.

99    As to those acts, the respondents pleaded that, so as to enable its customers to comply with their obligations under the various legislative regimes, the first respondent obtained MSDSs (created by persons other than itself) from employers (who obtained MSDSs from MISs and provided them to the first respondent), from MISs (upon the request of an employer), and from the websites of MISs in both hard copy and a variety of electronic formats, and compiled and made available to its own customers, in a conveniently searchable form, such MSDSs in the format in which they had originally been provided. Their defence makes clear (subject to certain qualifications that are not relevant for present purposes) that such MSDSs included those that had been created using the Infosafe system.

100    The respondents’ defence does not make clear who their “customers” are and, in particular, whether they are MISs, employers or occupiers and the like who are required, under the legislative regimes, to obtain MSDSs and make them readily accessible to employees who could be exposed to the products in question.

101    The primary judge found (at [128]) that the first respondent continuously searched the Internet for MSDSs generally, and that its activities in that regard were not confined to the satisfaction of requests by, or to the needs of, its existing customers.

102    In that connection the primary judge (at [20]) made the following finding:

… When [the first respondent] is required to give access to an MSDS of which it has not been the author for the relevant MIS, it will locate the MSDS on the Internet (and/or by direct communication with the MIS), download the MSDS as an entity and then store it as part of the Collection, from where any of its non-MIS customers who might require access to the MSDS could, under appropriate commercial relationships with [the first respondent], achieve that access. Necessarily, such an MSDS will be identical in content and appearance to the “original” MSDS from which it was derived.

103    The primary judge also appears to have accepted (at [93]) that most of the MSDSs in the Collection had been added without any particular request from a customer and that the first respondent obtained such MSDSs by “trawling” the Internet to find them. This evidence was in fact given by the second respondent in the course of cross-examination.

104    It is clear from these findings that the first respondent’s “customers” include non-MIS customers with whom the first respondent enters into arrangements to provide MSDSs from the Collection.

105    It is also important to note that, in support of their case that there was an implied licence, the respondents relied upon the judgment of Merkel J in Acohs Pty Ltd v R A Bashford Consulting Pty Ltd (1997) 37 IPR 542. As it happens, the second respondent was a respondent in that proceeding who had cross-claimed against the present appellant alleging copyright infringement of 43 MSDSs that had been transcribed by the appellant and added to the CDB as Infosafe MSDSs. In that case Merkel J upheld the present appellant’s defence to that cross-claim. His Honour found that, by transcribing the MSDSs and storing the relevant data in the CDB and by thereafter making them available for a fee, the present appellant was acting pursuant to an implied licence.

106    In the present case, the primary judge recorded (at [128]) that the appellant did not ask him to depart from Bashford, either in point of principle or at the level where Merkel J held that the “industrial use” and the “library use” of MSDSs were implicitly licensed by the copyright owner. We describe these particular uses later in these reasons.

107    Be that as it may, it is nevertheless important for us to discuss the reasoning and ultimate finding on the question of implied licence in Bashford for two reasons. The first reason is that the appellant argued that the respondents’ impugned acts fell outside the scope of the implied licence found in that case. The second matter, which we will discuss further below, is that the primary judge (at [141]) accepted that the content of the implied licence which he found in the present case was broader than that recognised by Merkel J in Bashford.

108    The apparent acceptance by the parties of the correctness of Bashford has important ramifications for this appeal. As the parties conducted both the trial before the primary judge and the present appeal on that basis, the occasion does not arise for us to proceed otherwise than in accordance with, and to the extent of, that acceptance. In so proceeding, we do not wish to be taken as endorsing the correctness of all aspects of that decision.

The reasoning and ultimate finding in Bashford

109    In Bashford Merkel J took as his starting point the statement of principles discussed by Jacobs J in Beck v Montana Constructions Pty Ltd (1963) WN (NSW) 1578 with respect to implied licences.

110    Beck was a case involving the copyright in architects’ plans. In that case architects were engaged to prepare sketch plans for a building to be erected on certain land. The clients who had commissioned the architects later sold the land, with the plans. The purchaser of the land then engaged another architect to prepare further plans. Those plans were found to be a substantial reproduction of the sketch plans. The original architects sued the purchaser and its architect for infringement of the copyright in the sketch plans.

111    In dealing with the question of whether there was an implied licence, Jacobs J identified two steps. The first step was to determine whether the original client obtained the right to use the copyright work in the manner in which it was ultimately used. The second step was to determine whether the purchaser of the land (in circumstances where it had been held out to the purchaser that plans were available and approved) had obtained that same right.

112    As to the first step, Jacobs J (at 1581) said:

The question raised is quite a broad one because it applies not only to architects but would apply for instance to artists who are engaged to prepare a particular work which would of its nature be reproduced, for instance a cartoon for a tapestry or a mosaic, or which would apply to persons who prepared written material with the intention that it should be used in a particular manner. It seems to me that the principle involved is – that the engagement for reward of a person to produce material of a nature which is capable of being the subject of copyright implies a permission or consent or licence in the person making the engagement to use the material in the manner and for the purpose in which and for which it was contemplated between the parties that it would be used at the time of the engagement. It seems to me that this must be regarded as a principle of general application.

113    Later (at 1582) his Honour said:

I think it is a principle which can be found to be applied in a number of cases. It relates to permission or consent to what must have been taken to have been within the contemplation of the parties at the time of the engagement. After all, it must be borne in mind that it is the engagement which brings the copyright material into existence.

When that principle is applied in the present case it seems to me to be inevitable that one should conclude that the payment for sketch plans includes a permission or consent to use those sketch plans for the purpose for which they were brought into existence, namely, for the purpose of building a building in substantial accordance with them and for the purpose of preparing any necessary drawings as part of the task of building the building.

114    As to the second step, his Honour (at 1581) said:

Assuming the right of the owner of land to make use of sketch plans for the purpose of erecting a building substantially in accordance with that sketch I think that when he sells the land and holds out to the purchaser that plans are available and approved from all authorities and shows those plans to the purchaser then on the sale of the land there should be implied an agreement collateral to the sale of the land whereby the vendor grants to the purchaser such right as he has to the use of the plans. This assumes that the right, that is to say, the licence, permission or consent, however it is described, is assignable and that depends on the implied terms of grant of the original licence, permission or consent. It therefore seems to me that subject to the first matter then the second question may be answered in the affirmative.

115    In Bashford, Merkel J (at 559) took Beck as establishing a principle that, if copyright material is produced for a particular purpose, there is an implied permission, consent or licence to use that material to carry out that purpose. This general statement of the principle had been articulated earlier by Young J in R & A Bailey & Co Ltd v Boccaccio Pty Ltd (1986) 4 NSWLR 701 at 711 and adopted by Beaumont J in De Garis v Neville Jeffress Pidler Pty Limited (1992) 37 FCR 99 at 110. However, his Honour recognised (at 559-560) the importance of identifying, with precision, the particular purpose for which the copyright work was brought into existence and whether use for that purpose was restricted to the person to whom the licence was granted. In that connection his Honour also identified the importance of an associated question, namely whether the licence could be “transferred”. It is clear that his Honour (at 562) saw the answer to that associated question as being closely related to the scope of the purpose for which the copyright work was created.

116    His Honour (at 560-561) reasoned that the licence considered in Beck was implied by law to a particular class of contract as opposed to one implied to give business efficacy to a particular contract: see, in that regard, Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468 at 486-487; cf Devefi Pty Ltd v Mateffy Pearl Nagy Pty Ltd (1993) 113 ALR 225 at 239-241. His Honour nevertheless concluded (at 565) that, if he was in error in that regard, such a licence would be implied, in any event, in each particular contract for the commissioning of each MSDS, as a term necessary to give business efficacy to the contract.

117    His Honour (at 562) saw the contract of engagement before him as an “open contract” (that is, one not dealing with the ambit of the licence or with the terms on which an assignment of that licence might be effected). His Honour saw the contract of engagement as being one “to prepare written material, being MSDSs, with the intention that they be used for a particular purpose, being the provision of ready access to the information contained in the MSDSs for safety related purposes”. His Honour concluded that the licence was one that permitted or consented to the use of the MSDSs to carry out those purposes. This purpose was determined objectively by reference to the contract entered into by the parties and the regulatory and factual matrix in which the transaction took place. His Honour said (at 562):

There is little difficulty in ascertaining the relevant matrix in the present case. The MSDSs were commissioned by manufacturers and importers to be in the Worksafe Australia standards format for use, inter alia, as set out in the standards. Bialkower accepted that he was commissioned to prepare MSDSs which would be distributed by manufacturers and importers on the sale of their products in accordance with the standards. They were commissioned in relation to substances, including hazardous substances, for the purpose of ensuring the ready availability and accessibility of the MSDSs for safety related purposes for or at any workplace in Australia at which the substances are or will be stored, used or transported.

118    His Honour also said (at 564):

In the regulatory and factual matrix to which I have referred, there is little difficulty in identifying the manner in which the parties contemplated that the Chemwatch MSDSs commissioned by manufacturers and importers were to be provided. The availability and accessibility of the MSDSs for or at workplaces was to be in a photocopy or microfiche format or from a computer database. The reproduction or copying of the MSDSs in any of these formats may be commissioned by a manufacturer, importer, supplier, retailer, a public emergency service or by or for any employer from contractors engaged for the purpose if for any reason that is not achieved “in house”.

119    His Honour (at 564) concluded:

I am satisfied that, in accordance with Beck, an accurate copying, reproduction or adaptation of any of the 43 Chemwatch MSDSs in the manner and for the safety related purposes to which I have referred falls within the implied licence of Bialkower.

120    The implied licence thus found by Merkel J was one that extended, in the first instance, to manufacturers, importers, suppliers, retailers, employers and to any other person requiring an MSDS for the safety related purposes for which it was prepared. However, his Honour said (at 564-565) that, if he was in error in that regard, he would reach the same conclusion as that reached in Beck in respect of the right to “transfer” the licence, namely that it must inevitably be implied in the contract of engagement that the MIS who commissioned the MSDSs had the right to “transfer” that right to retailers, employers and other persons requiring MSDSs for the same safety related purposes.

121    It is clear that the implied licence pleaded by the respondents in the present case was one in favour of the appellant’s customers (namely, each MIS who commissioned the creation or transcription of its relevant MSDSs), and not other persons. However, in accordance with Merkel J’s alternative formulation, the respondents also pleaded that each such MIS had the right, in turn, “to reproduce and licence [sic] the further reproduction of the alleged copyright works for the purpose of ensuring the ready availability and accessibility of the MSDS”.

122    The implied licence admitted on the pleadings by the appellant did not go that far. However, on appeal the appellant accepted that an MIS’s contractual rights would be “sufficiently protected” by the implication of a licence that permitted the MIS and any employer or occupier who used the relevant product to reproduce and to authorise others to reproduce the necessary MSDS on their behalf. Nevertheless, in expressing that acceptance, the appellant submitted that any implied licence in the contract for the creation of the copyright works should not be wider than necessary to avoid undermining the rights conferred under the contract: Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 450; Concrete Pty Limited v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at [59].

123    When Merkel J came to examine the impugned use of the MSDSs in the case before him against the background of his findings about the nature and scope of the implied licence, he identified two uses which he referred to as the “industrial use” and the “library use”.

124    The “industrial use” referred to the acts of transcribing MSDSs to form part of the Infosafe system. These acts were described as having been specifically commissioned by an MIS or employer using the hazardous or other products the subject of the MSDSs and having access to the system. This use was found by Merkel J (at 565) to fall within the implied licence he had found.

125    The “library use” referred to the acts of maintaining MSDSs (including the transcribed MSDSs) on the CDB and making them available as a “library”, for a fee, to public emergency or safety organisations, as well as to the Commonwealth Surgeon-General for use by sections of the Defence Forces using chemicals.

126    His Honour considered it to be “less clear” that the “library use” was within the implied licence he had found. Nevertheless his Honour (at 565) concluded that this use fell within the safety related purposes for which the relevant MSDSs were brought into existence, saying:

The sole function of the library use is to ensure that public emergency services or organisations can provide instant access to MSDSs for safety related purposes to those in need of that information. The only reason for any of these entities to obtain or provide access to an MSDS is that such access is necessary for that entity to provide safety information to those in need of it, as a result of using the chemical the subject of the MSDS.

127    His Honour therefore found the “library use” to fall within the implied licence.

128    It should be noted at this juncture that the appellant distinguished the “industrial use” and the “library use” found by Merkel J from the impugned use in the present case. In the present case the primary judge recorded the appellant’s contention (at [128]) as follows:

[The appellant] says that the evidence discloses, at least for the main part, that [the first respondent] reproduces MSDSs, and places them into the Collection, not on the specific request of users of the substances involved (employers, occupiers etc), but at its own initiative and as part of its own commercial operation, entirely with a view to stocking the Collection with every MSDS available in the electronic universe, so as to be in a position to market its services by reference to the claim that the Collection has no equal in the range of MSDSs which it contains.

129    It is now convenient to turn to the primary judge’s reasons and conclusions on the question of implied licence in the present case.

The primary judge’s findings

130    The primary judge (at [136]) reasoned that, in considering the scope of the implied licence, the focus must be upon the use to which the MSDSs copied into the Collection might ultimately be put.

131    The primary judge found that the storage of the MSDSs in the Collection by the first respondent was in contemplation that access to them would, later if not sooner, be required by its customers, present or future. The primary judge reasoned that, seen in this way, the first respondent’s purpose in reproducing and storing Infosafe MSDSs was to facilitate the “industrial use” of those MSDSs. Implicitly the primary judge treated these facilitative steps as tantamount to the “industrial use” found in Bashford.

132    The primary judge (at [137]) also considered that the first respondent’s copying and storing of MSDSs fell within the “library use” found in Bashford. In so reasoning, the primary judge recognised that, in Bashford, the MSDSs were only placed in the CDB after they had been altered or transcribed for a particular customer. However, the primary judge considered this to be a distinction without a difference. The primary judge observed that if the relevant purpose relates to a later use of a particular MSDS, it was beside the point that the initial creation of the document had a different purpose. His Honour (at [137]) said:

The question was (and still is): what was the purpose for which the “library” was stocked with MSDSs? If it was to make them available to those who would or might require access to them in connection with their responsibilities under the regulations, that purpose should, in my view, give rise to a Bashford-type implied licence.

133    In short, the primary judge reasoned that the steps taken by the first respondent to reproduce and store in the CDB an MSDS created by a third party in contemplation that one of the first respondent’s existing or potential customers might later require such a copy of that MSDS from the first respondent, were covered by an implied licence granted by the copyright owner, of which the first respondent had the present benefit.

134    In support of this approach, the primary judge (at [139]) referred to the fact that, in some Australian jurisdictions, an MIS is required to provide an MSDS to any person who “reasonably requires a copy”; or to “any member of the public who requests a copy”; or “on request”. The primary judge reasoned that provisions of this kind made it more difficult to confine the implied licence in the way the appellant had contended: if any person could obtain a copy of an MSDS, there was no reason why that person could not be the first respondent.

135    The primary judge (at [141]) concluded:

Either because the ultimate purpose of such copying would inevitably be the “industrial use”, or because [the first respondent’s] activities fell squarely within the “library use”, I consider that the implied licence extends to it.

The parties’ submissions

136    On appeal the appellant accepted that an implied licence existed. In that connection it submitted that there was nothing to stop the first respondent “from making or obtaining a copy of an Infosafe MSDS on behalf of an employer or occupier customer who actually requires a copy” and who “does enjoy the benefit of an implied licence from [the appellant]”.

137    However, although accepting that an implied licence existed, the appellant submitted that the primary judge erred in three respects concerning the scope of that licence.

138    First, it submitted that the primary judge failed to have proper regard to the requirement of “necessity”.

139    Secondly, it submitted that the primary judge erred in considering that the “purpose” in respect of the use of the MSDSs was one imposed by law rather than seen as a question of fact.

140    Thirdly, it submitted that the primary judge erred in extending the benefit of the implied licence to the first respondent when it was not a party to or otherwise privy to rights under the contracts of engagement between the appellant and its customers who were MISs.

141    The respondents answered these submissions in the following way.

142    First, they submitted that the primary judge followed and applied the principles in Beck and that, to the extent that “necessity” is the foundation for the implication, that requirement is involved in the test in Beck. In any event, they submitted that “necessity” is not the sole basis upon which terms will be implied by law in a class of contracts.

143    Secondly, they disputed that the primary judge considered the question of “purpose” without regard to questions of fact. In that connection they pointed to the primary judge’s acceptance (at [135]) of Merkel J’s observation in Bashford that the content of the licence was informed by “the regulatory and factual matrix in which the transaction took place”: Bashford at 562.

144    Thirdly, as to the question of whether the primary judge erred in extending the licence to the first respondent, the respondents submitted that the implied licence must extend to service providers “given their legitimate role in assisting MIS[s], employers and occupiers to meet their obligations under the regulations”. In this connection the respondents pointed to the concerns of large organisations dealing with large numbers of substances, large numbers of employees or large numbers of work sites.

Consideration

145    In our view there can be no doubt that, in the context of Australian copyright law, a licence will only be implied when there is a necessity to do so. This principle was made clear in the unanimous judgment in Copyright Agency Limited v State of New South Wales (2008) 233 CLR 279 at [92] (CAL), which also cited in that regard Concrete at [13]-[14] (per Gummow A-CJ) and [96] (per Kirby and Crennan JJ); Byrne at 450 (per McHugh and Gummow JJ); and Breen v Williams (1996) 186 CLR 71 at 91 (per Dawson and Toohey JJ), at 102-103 (per Gaudron and McHugh JJ) and at 124 (per Gummow J).

146    In the present case the parties treated the licence as arising as a matter of law in a particular class of contract between an MIS and a service provider, such as the appellant or the first respondent: cf Concrete at [18]. “Necessity”, in that context, means necessary for the reasonable or effective operation of all contracts of that particular class lest the enjoyment of rights be “rendered nugatory, worthless, or, perhaps, be seriously undermined”: Byrne at 450; see also Concrete at [59].

147    The implication of such terms is to be distinguished from terms implied in the circumstances of the particular case to give business efficacy to the contract. In that latter category of case the terms implied are unique to the particular contract in question, depending upon the form of the contract, the express terms and the surrounding circumstances: Byrne at 448. In those cases, the implication is taken to reflect the actual intention of the parties. In cases of contracts of a particular class, wider considerations are at play and the term is implied as a legal incident of such contracts: Byrne at 448; Esso Australia Resources Limited v Plowman (1995) 183 CLR 10 at 30; Castlemaine Tooheys at 487-489.

148    The decision in Beck must be read subject to the requirement that a licence will only be implied when there is a necessity to do so, although, having made that observation, we would add that Jacobs J’s treatment in Beck of the implication of licences is consistent with that approach.

149    The respondents’ submissions tended to treat the requirement of necessity in a somewhat attenuated way, especially in submitting that “necessity” is not the sole basis upon which a licence would or could be implied in the present case. In our view that submission cannot be accepted in light of the unequivocal statement of the High Court in CAL.

150    We should add that, although the respondents’ defence pleaded, as an alternative, the existence of an implied licence to give business efficacy to the agreements between the appellant and its MIS customers, the parties did not contend on appeal that, under that theory, a different result would ensue in the present case. Indeed, the parties’ submissions did not seek to differentiate between the two possible bases for implying a licence raised in this case.

151    It is in this context that the appellant’s second submission concerning “purpose” falls to be determined. The primary judge plainly proceeded on the basis that the case before him was one concerning a licence implied as a legal incident of a particular class of contract, not to give business efficacy to a particular contract or to particular contracts. It is not suggested that his Honour was in error in so approaching the matter. However, the appellant’s submission on “purpose”, focusing as it does on particular facts, appears to be directed to a licence implied to give business efficacy. If so, that submission is misdirected insofar as it was also sought to be related to the question of whether a licence should be implied to contracts of a class. In any event, the “facts” to which the appellant points in that regard are really no more than the facts of “contemplated use” common to all contracts of engagement between an MIS and a service provider for the creation of MSDSs. It is plain that the primary judge took into account the relevant factual matrix concerning the creation of MSDSs and their use in the relevant circumstances. In the end, we do not see the appellant’s second submission as establishing any error in the approach taken by the primary judge in this regard. It seems to us that the real focus of attention for the purposes of this aspect of the appeal lies in the first and third submissions made by the appellant.

152    As the primary judge acknowledged (at [141]), the content or scope of the implied licence he found was broader than that recognised by Merkel J in Bashford. Both the “industrial use” and the “library use” described by Merkel J were, in the case of transcribed MSDSs, limited to where a person having the benefit of an implied licence to reproduce, or to authorise others to reproduce, an MSDS, requested a service provider, such as the first respondent, to carry out that work on its behalf. The appellant makes no complaint about such conduct. But here the primary judge found that the first respondent also copies (reproduces) MSDSs in anticipation that users will at some point engage it to provide access to a suite of MSDSs in the Collection. The primary judge justified these antecedent acts by looking to the ultimate purpose for which such reproduced MSDSs would be put. In so doing his Honour erred by attributing to the first respondent, in reproducing these MSDSs, consents or permissions it did not then have and might never have. In these cases, therefore, the first respondent, without the licence of the copyright owner (relevantly, the appellant), did an act comprised in the copyright, and thereby infringed that copyright.

153    We can see no reason of necessity why a licence in favour of a service provider to engage in these antecedent or anticipatory acts should be implied in contracts of engagement to create an MSDS, to which the service provider is not a party. While arguments of convenience or expediency might be advanced for the availability of such a facility, these alone would not justify the implication, by law, of a licence to that effect. No different answer is required in the present case if the matter is approached by considering whether such a licence should be implied in each contract of engagement to give business efficacy to that contract.

154    In our view, therefore, the implied licence did not extend to the first respondent’s reproduction of the Acohs-authored Infosafe MSDSs or its communication or supply of those works in the absence of a request for those works for safety related purposes.

Absence of licence

The primary judge’s findings

155    It is necessary for us to return to the first component of the respondents’ defence, which was that the appellant had not discharged the onus of showing that the impugned acts were done without its licence. This issue arose in the context where, at least at the time of final submissions, the parties agreed that an implied licence existed, but the scope of that licence was disputed. The primary judge dealt with the issue on the basis that the availability to the first respondent of an implied licence to reproduce the Infosafe MSDSs turned upon whether a request to copy (reproduce) a particular MSDS had been received by the first respondent from a customer who had present regulatory obligations to provide or to have access to the MSDS in question (that is, in circumstances which all parties accepted were covered by an implied licence).

156    In this connection the primary judge found (at [128]) that there was a question as to the identification of the appellant’s MSDSs that had been reproduced by the first respondent “without the present needs of any customer in mind”. That is to say, there was a question as to the identification of those Infosafe MSDSs that had been reproduced by the first respondent pursuant to a request (and hence covered by the agreed implied licence) and those MSDSs that had been reproduced by the first respondent in anticipation of receiving such a request.

157    The primary judge appears to have accepted the general tenor of the evidence given by the second respondent that the first respondent receives “four or five thousand” requests each week to add MSDSs to the Collection. The second respondent also gave evidence that the first respondent was “routinely provided with copies of Infosafe MSDS[s] by [the first respondent’s] customers so that those customers can access the MSDS[s] using the Chemwatch [that is, the first respondent’s] system”. A limited number of examples of correspondence containing such requests were in evidence.

158    The primary judge found (at [131]) that many of the Infosafe MSDSs copied by the first respondent were copied upon the requests of customers. His Honour also found that many were copied in the absence of such requests. His Honour found that the evidence was not such as to fairly raise an inference that “any particular MSDS was copied in the latter, rather than the former, situation”.

159    In this connection the primary judge stressed that, although it lay principally within the first respondent’s power to deal with the matter by evidence, it was not its burden to establish the existence of an implied licence in any instance, but for the appellant to prove the contrary.

160    It followed from the primary judge’s findings as to what his Honour saw as shortcomings in the appellant’s evidentiary case, that it had not discharged its onus of establishing that the Infosafe MSDSs in suit (of which there were approximately 72,000) had been reproduced by the first respondent without its licence.

The parties’ submissions

161    The appellant contended that the primary judge’s conclusion that it had failed to discharge its onus of proof was attended by two errors: first, that the primary judge failed to have any or any sufficient regard to the principle that evidence is to be weighed according to the proof which is in the power of one party to produce and in the power of the other to contradict; secondly, the primary judge’s finding that many of the Infosafe MSDSs had been copied at the request of customers was not supported by the evidence.

162    Neither of these matters was identified as a ground of appeal in the amended notice of appeal on which the appellant ultimately proceeded. The respondents raised no objection to this omission and we heard argument on both matters. In the circumstances we propose to deal with both contentions as if they had been formally raised as grounds of appeal.

163    Reduced to its essence, the appellant’s submission was that, having established a case that many MSDSs had been reproduced by the first respondent without a customer request, an evidentiary burden was cast upon the first respondent to show which of the MSDSs it had reproduced pursuant to such a request. It submitted that this information was peculiarly within the knowledge or means of the respondents, rather than the appellant. It submitted that the generalised evidence given by the second respondent on this question was not sufficient to discharge that burden.

164    The respondents, on the other hand, submitted that the primary judge expressly took into account the fact that it lay principally within their power to deal with the question of the extent of customer requests by evidence. They submitted, however, that the primary judge can be taken to have held that any evidentiary burden borne by them had been discharged. They submitted that, in any event, this was not a case in which the respondents could or ought reasonably to have called evidence to establish the existence of a request in respect of each MSDS the subject of the appellant’s claim, given the number of such MSDSs in issue.

165    With respect to the second alleged error, they submitted that it was open to the primary judge to find that “many” of the MSDSs reproduced by the first respondent were copied at the request of customers. In that connection they pointed to the fact that this finding was based on the primary judge’s favourable credit findings in respect of the second respondent.

Consideration

166    In our view the appellant has not established error on the part of the primary judge in concluding that many of the Infosafe MSDSs copied by the first respondent were copied upon the requests of customers. In arriving at that conclusion, the primary judge gave particular emphasis to the second respondent’s evidence. Although acknowledging that the second respondent was “only generally familiar with the detailed process by which MSDSs were copied”, the primary judge accepted the second respondent as a witness of truth. Importantly, the primary judge considered the second respondent’s evidence, in light of the size of the first respondent’s operations, to be inherently probable. These subsidiary findings were matters of judgment based upon the primary judge’s overall evaluation and appreciation of the evidence before him. The appellant has not established any sound basis to interfere with those findings. Those findings entitled the primary judge to come to the broadly-stated conclusion which the appellant now challenges. However, it is important to note the limitations of that conclusion: except by reference to a very small number of examples, the respondents did not identify which Infosafe MSDSs had been reproduced by the first respondent acting pursuant to a customer’s request.

167    It is also important to note that the primary judge’s broadly-stated conclusion does not in any way gainsay his Honour’s acceptance (at [93]) of the following evidence that was given by the second respondent under cross-examination:

And is it the case that most of the MSDSs in the Collection have been added without any particular request from a customer? — I think that’s probably a fair estimate.

And the way you get them is simply to trawl the Internet to find MSDSs? — That’s right.

Yes. And any MSDSs you find then get put into the Collection? — I think that’s probably true, yes.

Yes, and they are put in the Collection in the form in which you find them? — That’s right.

Which could be HTML or PDF or Word or other forms? — True.

168    The real issue on this part of the appeal is whether the primary judge was in error in concluding, in effect, that the appellant could not succeed, in any event, because its evidentiary case did not rise to the level of establishing which of the Infosafe MSDSs had been reproduced by the first respondent in circumstances where no present request to reproduce the MSDS had been made by a person impliedly authorised by the appellant to make that request.

169    It is without question that the appellant had the onus of proving infringement. However, that onus was one to be discharged upon the whole of the evidence: Purkess v Crittenden (1965) 114 CLR 164 at 168. It was the respondents who raised, by their pleaded defence, the existence of an implied licence, in answer to the appellant’s allegations of infringement. The defence pleaded was, in terms, somewhat more limited than that found by the primary judge. As we have noted, it was pleaded as a licence to the appellant’s customers (not to either of the respondents) to reproduce and license the further reproduction of the alleged copyright works. In those circumstances, any lawful consent or permission for the first respondent to reproduce an Infosafe MSDS or for the second respondent to authorise the first respondent to do so, could only derive from a customer having the benefit of such a licence, hence the importance of identifying whether a particular MSDS was reproduced by the first respondent acting pursuant to such a request.

170    It is in these particular circumstances that the appellant sought to invoke the common law principle stated by Lord Mansfield in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 that all evidence is to be weighed according to the proof which is in the power of one side to have produced, and in the power of the other side to have contradicted. In Medtel Pty Ltd v Courtney (2003) 130 FCR 182 Branson J at [76] (with whom Jacobson J at [81] agreed) observed that s 140 of the Evidence Act 1995 (Cth), which is concerned with the standard of proof in civil proceedings, is to be understood as incorporating that common law rule.

171    Here, in response to the respondents’ pleaded defence that they could avail themselves of a licence implied by law in favour of the appellant’s customers, the appellant had established that most of the MSDSs in the Collection had been added without any particular request from a customer. It was within the power of the respondents, who, in furtherance of their defence, either knew or must be taken as having the means of identifying which of the Infosafe MSDSs had been added to the Collection upon the requests of customers, to place that evidence before the Court. They did not do so. Rather, they sought to rely merely upon the fact that requests had been made, without going further, except in the limited cases that were exemplified. The evidentiary landscape, in that regard, was somewhat similar to the “ominous rumbling references” described by Windeyer J in The Commissioner of Taxation of the Commonwealth of Australia v Casuarina Pty Ltd (1970) 127 CLR 62 at 72 when dealing, in an appeal against the Commissioner of Taxation’s assessment of taxation (in which the taxpayer bears the onus of proof), with a particular instance of the evidentiary burden placed upon the Commissioner to raise a particular matter in evidence so as to enable the taxpayer to deal with that issue in discharge of the taxpayer’s overall burden of proof.

172    It was for the respondents to make good the evidentiary foundation for their defences in relation to the copyright works on which they had been sued for infringement. This included not only the factual matrix necessary to establish the existence and scope of the licence on which they relied, but also the identification of the specific reproductions that fell within that licence.

173    By adducing evidence merely sufficient to enable the conclusion to be drawn that many of the Infosafe MSDSs in the Collection had been reproduced upon the requests of customers, without identifying (except in a very limited number of cases) which MSDSs had been so reproduced, the respondents did not thereby effectively throw upon the appellant the evidentiary burden of establishing the identity of those MSDSs. The identity of those MSDSs could only have been known to the respondents. In effect the respondents sought to place upon the appellant the burden of making good or filling gaps in the respondents’ evidentiary case in ways that were essential to completing the respondents’ defence to copyright infringement.

174    For these reasons, the primary judge erred in finding, effectively, that the appellant had failed to discharge its onus of proof to negative the existence of a licence in favour of the respondents in respect of the Infosafe MSDSs reproduced by the first respondent.

175    It follows from this conclusion that the primary judge ought to have held that, except in the very limited number of cases shown by the respondents, the evidence fell short of establishing that any particular MSDS in the Collection had been reproduced with the permission or consent of the appellant (that is, within the limits of the implied licence defence). In those circumstances, the primary judge should have further held that, on the whole of the evidence, the appellant’s case on infringement of the Acohs-authored MSDSs (except in the very limited number of cases shown by the respondents) had been established to the required standard.

notice of contention

Introduction

176    The respondents advanced four contentions for arguing that the judgment below should be affirmed.

177    First, they contended that the copyright in each MSDS, or in the HTML source code for that MSDS, created by the appellant for Castrol Australia Pty Ltd (Castrol), BP Australia Pty Ltd (BP) or Dow Chemicals (Australia) Ltd (Dow) had been assigned to those companies pursuant to ss 196(3) and 197(1) of the Copyright Act.

178    Secondly, they contended that, to the extent that the first respondent had reproduced any HTML source code for Infosafe MSDSs, it did so pursuant to an implied licence granted by the appellant.

179    Thirdly, they contended that, by denying the existence of an implied licence authorising the respondents’ impugned acts, the appellant was seeking, impermissibly, to “approbate and reprobate”.

180    Fourthly, they contended that the appellant’s contribution to the Infosafe MSDSs, as set out in certain particulars, and in a letter from the appellant to the respondents, was not sufficient to render the appellant the owner of any copyright subsisting in the Infosafe MSDSs as original literary works. The contention developed in submissions by the respondents was that, by finding that copyright subsisted in the Acohs-authored MSDSs, the primary judge erred by travelling beyond the appellant’s pleaded case, such that the respondents were denied the “opportunity to test the case upon which the primary judge found for [the appellant]”.

181    We shall deal with each contention in turn.

Assignment

182    The primary judge found (at [107]) that, in February 1997, the appellant and Castrol entered into an agreement for the provision of “MSDS authoring services” by the appellant. The agreement contained the following provision:

Acohs shall assign the copyright of all prepared MSDS[s] to Castrol.

183    The respondents had submitted that this term was not a promise to assign but an operative assignment that was effective upon execution of the agreement in 1997. The primary judge (at [107]) rejected that submission.

184    The primary judge found (at [109]) that, in 2002, the appellant and BP entered into a consultancy/service agreement. The agreement contained the following provision:

The Consultant shall assign to BP AUSTRALIA all intellectual property rights (if any) in any compilation of data compiled on behalf of BP AUSTRALIA and in any MSDS written by the Consultant for and on behalf of BP AUSTRALIA by the Consultant. Where the Consultant is required to write software (other than amendments to the Consultant’s own software) the Consultant will, if required, enter into an agreement to assign all IPR to BP AUSTRALIA.

185    The primary judge also found this provision to be a promise to assign rather than a present assignment.

186    The primary judge further found that an agreement made in February 2002 between the appellant and Dow contained a provision in relevantly the same terms as that quoted with respect to the agreement between the appellant and BP.

187    The primary judge found (at [111]) that, in late 2007, the appellant entered into what were described as “deeds of rectification” with, relevantly, Castrol and BP. In the case of Castrol, the deed provided for the deletion of the provision to assign copyright. That provision was replaced by the following provision:

The consultant shall assign to Castrol Australia Pty Ltd all intellectual property rights (if any) in any data authored by the consultant for and on behalf of Castrol Australia Pty Ltd (which includes the data inserted in an Infosafe MSDS but excludes the layout and presentation of any Infosafe MSDS or any source code generated by the Infosafe programs in order to display an Infosafe MSDS on the world wide web or a computer). Where the consultant is required to write software for and on behalf of Castrol Australia Pty Ltd (other than amendments or enhancements to the consultant’s own software) the consultant will, if required, enter into an agreement to assign the intellectual property referred to in this paragraph to Castrol Australia Pty Ltd.

188    It can be seen that this provision concerned rights of, arguably, a more limited kind than copyright in the MSDSs.

189    The primary judge recorded (at [111]) that a similar amendment was made to the agreement with BP.

190    The primary judge reasoned (at [114]-[115]) that these “deeds of rectification” changed the promises to assign “in point of content”. But, importantly, the original agreement in each case only created a promise to assign, in any event. The primary judge found that, had copyright passed under the original agreements, “the applicable deed of rectification would not have made any difference to that circumstance”.

191    The respondents contended that the primary judge’s construction of the agreements, in each of the three cases, does not reflect what a reasonable person would understand the expression “shall assign” to mean. They contended that, as each agreement contemplated the creation of a large number of MSDSs, on an ongoing basis, a reasonable person would not read the words “shall assign” as requiring the appellant to execute an assignment each time an MSDS came into existence. They contended that “a more practical construction” would read the word “shall” as simply reflecting the fact that the MSDS had not yet come into existence. They contended that the construction found by the primary judge “leads to unreasonable, inconvenient and unjust consequences and ought not be preferred if another interpretation is reasonably open”: Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at 109.

192    They contended that, in each of the three cases, the primary judge ought to have held that each relevant MSDS had been assigned to the particular customer by operation of s 197(1) of the Act.

193    There can be no doubt that future copyright can be presently assigned, such that, when the copyright comes into existence, it vests in the assignee. So much is clear from s 197(1) of the Act. The only issue here is whether the words “shall assign” are words of present assignment, rather than a promise to assign at a future time.

194    In our view the words “shall assign” in their particular context are words of futurity referable to a discrete act. They are not words of present assignment.

195    The respondents’ arguments based on convenience and practicality cannot justify a construction which the words “shall assign” do not naturally bear. Moreover, we do not accept the proposition, implicit in the respondents’ contention, that the requirement for a separate assignment of copyright is a matter of inconvenience or impracticality. The respondents’ contention, in this regard, proceeds on the basis that, if their proffered construction is not accepted, the appellant would need to execute an assignment “each time an MSDS came into existence”. This is plainly not the case. Although an assignment would be needed, it would be open to the appellant and the other parties to the agreements to effect such an assignment at a time of their choosing and in respect of as many MSDSs as had been created by the appellant, as those parties might require. We can see nothing inconvenient or impractical in that setting.

196    In our view, therefore, this ground of contention fails.

HTML source code: implied licence

197    Given that we are not persuaded that the primary judge erred in concluding that the source code of each identified MSDS was not an original work for copyright purposes, the question of the existence of an implied licence to reproduce the code does not arise for determination.

198    We would observe, however, that, even if, contrary to our finding, copyright did subsist in the HTML source code for each Infosafe MSDS, any implied licence to reproduce the HTML source code that might arguably be found could not be broader in scope than the implied licence to reproduce the MSDSs themselves.

Approbation and reprobation

199    The essence of the respondents’ contention in this regard is that the appellant has advanced, in the present case, a position on the question of the scope of the implied licence that is, in substance, inconsistent with the position it had successfully advanced, by way of defence, in Bashford.

200    The particular principle on which the respondents rely was stated by Browne-Wilkinson V-C in Express Newspapers Plc v News (UK) Ltd [1990] 3 All ER 376 at 383-384, as follows:

There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance.

201    The nature of this principle was explored in Mandurah Enterprises Pty Ltd v Western Australian Planning Commission (2008) 38 WAR 276 by McLure JA at [95]-[125]. In that case her Honour observed that the notion of approbation and reprobation is used interchangeably in the case law with election, waiver and estoppel. Her Honour (at [108]) observed that it is difficult to confidently identify from the cases the material elements of any independent doctrine of approbation and reprobation.

202    In the Commonwealth v Verwayen (1990) 170 CLR 394 at 421 Brennan J (as he then was) said:

A doctrine closely related to election, and sometimes treated as a species of election, is the doctrine of approbation and reprobation. This doctrine precludes a person who has exercised a right from exercising another right which is alternative to and inconsistent with the right he exercised as, e.g., where a person “having accepted a benefit given him by a judgment, cannot allege the invalidity of the judgment which confers the benefit”: Evans v Bartlam [1937] 2 All E.R. at 652 per Lord Russell of Killowen.

203    It is not necessary for us to explore the nature of this doctrine, the basis for it, or the extent to which it could apply in the present case, for the simple reason that the fundamental premise for the respondents’ contention is missing. Here the appellant has not, ultimately, adopted a position that is inconsistent with the defence on which it successfully relied in Bashford. As we have already noted, the primary judge recorded (at [128]) that the appellant did not ask him to depart from Bashford, either in point of principle or at the level where Merkel J held that the “industrial use” and the “library use” of MSDSs were implicitly licensed by the copyright owner. The appellant’s case was that the respondents were driven to rely on the existence of an implied licence broader in scope than that found in Bashford. In so putting its case, the appellant was not acting inconsistently. Accordingly, this ground of contention fails.

Departure from the pleaded case

204    As we have noted, the contention developed in submissions by the respondents was that, by finding that copyright subsisted in the Acohs-authored MSDSs, the primary judge erred by travelling beyond the appellant’s pleaded case, such that the respondents were denied the opportunity to test the case upon which his Honour found for the appellant.

205    We have referred to the chameleon-like quality of the appellant’s case in relation to copyright subsistence in the Infosafe MSDSs. In the end result, however, the following matters are clear.

206    First, the appellant’s pleaded case was clear in that copyright was claimed in each MSDS identified by the appellant in “annexures” to the seventh further amended statement of claim. Plainly, the primary judge appreciated this fact.

207    Secondly, in relation to the Acohs-authored MSDSs, the appellant claimed copyright “in respect of all aspects of such MSDS[s] other than the bare unformatted data therein”: see, for example, paragraph (xvi)(a) of the amended particulars of copyright ownership.

208    Thirdly, in correspondence with the respondents’ solicitors (quoted by the primary judge at [43]-[44]) dealing with the meaning of “bare unformatted data”, the appellant made clear that this meant the variable data in the MSDSs. Thus the appellant was not advancing a case that the variable data, as an unbroken string of words, divorced from the particular MSDS to which they related, constituted, in themselves, a copyright work.

209    Fourthly, the same letter drew attention to headings and sub-headings of fixed content in the MSDSs. The appellant said that the arrangement and selection of those headings and sub-headings in each Infosafe MSDS was part of the original content of that work (our emphasis).

210    Fifthly, the same letter made clear that the appellant relied on selection, arrangement and layout as contributing originality to each such MSDS.

211    Sixthly, the primary judge noted (at [63]) the respondents’ position that “each MSDS as a whole, including the words and data in the MSDS and the [manner] in which the words and data are laid out, presented and appear” constituted a single literary work for the purposes of the Act. The primary judge noted, in this regard, that nothing in the way that the respondents had presented their case, even after the appellant had amended its statement of claim, amounted to a withdrawal from, or a qualification of, that contention. The primary judge thus recorded the position ultimately reached by both parties to be that each MSDS in issue was a literary work for copyright purposes.

212    Seventhly, the primary judge’s finding that the MSDSs created by the Acohs-authors were original copyright works was based on his Honour’s acceptance (at [69]) that, even if every verbal and numerical element of an MSDS created by an author was to be found in the CBD, the author was still required to select the sub-headings that would be used, and those that would not be used. This finding was within the appellant’s case, identified by its pleading and particulars, and especially by the letter to which we have referred, that stated that the arrangement and selection of headings and sub-headings was part of the original content of the Infosafe MSDSs on which the appellant relied for copyright subsistence.

213    For these reasons we are satisfied that the primary judge’s finding (at [69]) did not mark a departure from the appellant’s case. Accordingly, this ground of contention fails.

Disposition

214    We would allow the appeal insofar as it concerns the appellant’s case on infringement of the Acohs-authored MSDSs reproduced by the first respondent without the prior request of a customer, and set aside orders 1 and 2 made by the primary judge on 10 June 2010. The proceeding should be remitted to the primary judge to deal with all outstanding issues including costs of the trial.

215    We are of the view that injunctive relief should be granted to restrain the respondents from reproducing or authorising the reproduction of the Acohs-authored MSDSs, without the licence of the appellant.

216    We are of the view that an order for costs of the appeal should be made in favour of the appellant subject to an allowance reflecting the measure of the respondents’ success on the issues arising for determination on the appeal. We will hear from the parties on that particular question by way of written submissions, which should be filed and served within 14 days. We will then determine that question on the papers. The submissions are not to exceed four pages in length.

217    The parties are to bring in draft orders otherwise giving effect to these reasons within 14 days.

Associate:

Dated:    2 March 2012