FEDERAL COURT OF AUSTRALIA
Copyright Agency Limited v Isentia Pty Ltd [2022] FCAFC 163
ORDERS
Applicant | ||
AND: | ISENTIA PTY LTD ACN 002 533 851 First Respondent MELTWATER AUSTRALIA PTY LIMITED ACN 121 849 769 Second Respondent COPYRIGHT TRIBUNAL OF AUSTRALIA Third Respondent | |
DATE OF ORDER: | ||
THE COURT ORDERS THAT:
Application
1A. Within 5 days, the applicant and first respondent may file any proposed variation or setting aside of these orders required by reason of their lodgement at 3am today of a notice of discontinuance between them.
1. The notice of objection to competency (as initially filed and as amended) be dismissed.
2. The originating application (as initially filed and as amended) be dismissed.
3. The written and oral submissions made by News Pty Limited and Nine Entertainment Co Pty Ltd (the intervening parties) be taken to be written and oral submissions made by the applicant.
4. The interlocutory application filed by the intervening parties for leave to intervene be dismissed.
5. The intervening parties pay the costs of the first and second respondents of and in connection with the interlocutory application filed by the intervening parties, as agreed or taxed.
6. Subject to order 5 above, the applicant pay the costs of and in connection with the proceeding, as agreed or taxed.
Confidentiality
THE COURT NOTES THAT:
A. On 18 July 2019, the Copyright Tribunal of Australia made orders implementing a confidentiality regime in CT 2 of 2017 and CT 2 of 2018 (Confidentiality Regime).
B. On 20 April 2022, the Copyright Tribunal of Australia made orders, by consent, which amended the Confidentiality Regime to allow the use of material classified under the Confidentiality Regime in this proceeding, but those orders otherwise remain in effect.
C. On 12 September 2022, the Copyright Tribunal of Australia made orders in CT 2 of 2017 and CT 2 of 2018, with effect from 28 November 2017, providing that any documents filed, tendered or otherwise introduced into evidence in those proceedings that are marked or listed as “Confidential”, “Highly Confidential” or “Restricted Access” in accordance with the Confidentiality Regime not be published or made available and not be disclosed to any person or entity except to those to whom disclosure can be made under the Confidentiality Regime.
THE COURT ORDERS THAT:
7. Subject to the following orders and to further order of the Court, pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth) and in order to prevent prejudice to the proper administration of justice, the reasons of Justices Jagot, Beach and Burley in this proceeding delivered on 23 September 2022 (Reasons for Judgment) not be made available to or published to any person save for the following:
(a) Federal Court of Australia (Court) staff and any other person assisting the Court;
(b) the Copyright Tribunal of Australia (Tribunal) staff and any other person assisting the Tribunal;
(c) barristers and external solicitors retained by the applicant for the purposes of the proceeding and who are permitted to access Restricted Access, Highly Confidential and Confidential information under the Confidentiality Regime;
(d) barristers and external solicitors retained by the first respondent or the second respondent for the purposes of the proceeding and who are permitted to access Restricted Access, Highly Confidential and Confidential information under the Confidentiality Regime;
(e) barristers and external solicitors retained by the intervening parties for the purposes of the proceeding and who are permitted to access the application book in this proceeding;
(f) support staff of the persons listed in sub-paragraphs (c) to (e) who are permitted to access Restricted Access, Highly Confidential and Confidential information under the Confidentiality Regime; and
(g) insofar as the relevant parts of the Reasons for Judgment refer to them, barristers and external solicitors retained by the persons referred to in the judgment who are permitted to access Restricted Access, Highly Confidential and Confidential information classified under the Confidentiality Regime.
8. No later than five (5) business days following delivery of the Reasons for Judgment, the external legal advisors for the applicant and the intervening parties are to jointly provide to the respondents a copy of the Reasons for Judgment which identifies by appropriate markings any alleged confidential information. Such identification is to make clear:
(a) the relevant category of confidentiality classification by reference to the categories set out in the Confidentiality Regime;
(b) the person to whom the information may be confidential (including any third party);
(c) the basis on which the information may be confidential; and
(d) the means by which or the manner in which the issue of confidentiality may be addressed (for example, by redaction).
9. No later than eight (8) business days following delivery of the Reasons for Judgment, the respondents’ external legal advisors are to each respond to the applicant and the intervening parties concerning the copy of the Reasons for Judgment provided pursuant to order 7 above, outlining:
(a) their position in relation to the confidentiality issues identified by the applicant’s external legal advisors pursuant to order 8; and
(b) any additional confidentiality issues, identifying:
(i) the relevant category of confidentiality classification by reference to the categories set out in the Confidentiality Regime;
(ii) the person to whom the information may be confidential (including any third party);
(iii) the basis on which the information may be confidential; and
(iv) the means by which or the manner in which the issue of confidentiality may be addressed (for example, by redaction).
10. No later than ten (10) business days following delivery of the Reasons for Judgment:
(a) the external legal advisors for the applicant, the first and second respondents and the intervening parties are to jointly provide the Court with an agreed version of the Reasons for Judgment identifying any proposed redactions of allegedly confidential information (including as it relates to third parties) and the basis for the proposed redaction of the confidential information or,
(b) in lieu of agreement, the external legal advisors for the applicant, the first and second respondents and the intervening parties are to separately provide the Court with versions of the Reasons for Judgment identifying any proposed redactions of allegedly confidential information and to make any corresponding application under s 37AF of the Federal Court of Australia Act 1976 (Cth), accompanied by evidence in support of the Confidentiality Application and submissions (the submissions being limited to three pages).
11. Any applications made as contemplated by order 10(b) are to be determined on the papers.
12. In the event that agreement is not reached by the parties and the intervening parties in respect of the redaction of third party confidential information, or if it is proposed that any information in the Reasons for Judgment which may be confidential to a third party will not be redacted, the relevant third parties are to be notified, and leave be granted to the parties to disclose the relevant third party information to those third parties no later than ten (10) business days following delivery of the Reasons for Judgment, so as to enable them to make any corresponding application under s 37AF of the Federal Court of Australia Act 1976 (Cth), accompanied by evidence in support of the application and submissions (the submissions being limited to three pages) not later than ten (10) business days following the disclosure contemplated herein.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
THE COURT:
[1] | |
[5] | |
[18] | |
[26] | |
[28] | |
[28] | |
[31] | |
[33] | |
5.4 The subject matter, scope and purpose of the Copyright Act | [41] |
[64] | |
[101] | |
[101] | |
[146] | |
[146] | |
[156] | |
[163] | |
[168] | |
[174] | |
[187] | |
[189] | |
[193] | |
[199] |
1 Copyright Agency Limited (CAL) applies for judicial review of a decision of the third respondent, the Copyright Tribunal of Australia granting licences to the second and third respondents, Isentia Pty Limited and Meltwater Australia Pty Ltd, to reproduce and communicate literary works (being newspaper articles) which CAL is authorised to license by its publisher members.
2 CAL contends that the effect of the Tribunal’s orders is to grant Isentia and Meltwater the licences they seek on terms, and subject to charges and conditions, which are beyond the power of the Tribunal to order or otherwise not legally reasonable.
3 Isentia and Meltwater contend that the application is incompetent because it has been filed out of, and not within a reasonable, time.
4 We conclude that the application is competent, but should be dismissed. Our reasons follow.
5 CAL is a collective licensing organisation representing the interests of publishers who own the copyright in newspapers, magazines, websites and other news-related publications. As such, CAL is a licensor within the meaning of s 136(1) of the Copyright Act 1968 (Cth) (the Copyright Act) and, thereby, for the purposes of Pt VI of that Act. Some publishers deal with CAL directly. Other publishers deal with CAL through a joint venture entity called CopyCo Pty Ltd. A “licensor” is defined in s 136 to mean:
… a body corporate for which both the following conditions are met:
(a) the body is incorporated under a law in force in a State or Territory relating to companies;
(b) the body’s constitution:
(i) entitles any owner of copyright, or any owner of copyright of a specified kind, to become a member of the body; and
(ii) requires the body to protect the interests of its members connected with copyright; and
(iii) provides that the main business of the body is granting licences; and
(iv) requires the body to distribute to its members the proceeds (after deduction of the body’s administrative expenses) from payments to the body for licences; and
(v) prevents the body from paying dividends.
6 Isentia and Meltwater are media monitoring organisations (MMOs). Their businesses involve the use and dissemination to their customers of copyright material created by the publishers who are members of CAL and whose interests CAL represents. They require licences of that copyright in order to conduct those activities. Streem Pty Ltd is also a MMO.
7 Isentia, Meltwater, and Streem applied to the Tribunal for licences under s 157(3) of the Copyright Act. Section 157(3) provides that:
(3) A person who claims that he or she requires a licence in a case to which a licence scheme does not apply (including a case where a licence scheme has not been formulated or is not in operation) and:
(a) that a licensor has refused or failed to grant the licence, or to procure the grant of the licence, and that in the circumstances it is unreasonable that the licence should not be granted; or
(b) that a licensor proposes that the licence should be granted subject to the payment of charges, or to conditions, that are unreasonable;
may apply to the Tribunal under this section.
8 Under s 136(1), a “licence” means a licence granted by or on behalf of the owner or prospective owner of the copyright in a work or other subject matter to do an act comprised in the copyright.
9 Section 157(1) deals with a person who claims, in a case to which a licence scheme applies, that the licensor operating the scheme has refused or failed to grant him or her a licence in accordance with the scheme. Section 157(2) deals with a person who claims, in a case to which a licence scheme applies, that he or she requires a licence but that the grant of a licence in accordance with the scheme would, in that case, be subject to the payment of charges, or to conditions, that are not reasonable in the circumstances of the case. Under both ss 157(1) and (2), the person making the claim may apply to the Tribunal.
10 A “licence scheme” is a scheme as defined under s 136(1).
11 The Tribunal granted interim licences to each of Isentia, Meltwater, and Streem shortly after they made their applications to the Tribunal. The Tribunal was empowered to do so by s 160 of the Copyright Act.
12 The Tribunal also made orders for the separate hearing and determination of certain questions of statutory construction concerning s 157(6B) of the Copyright Act. Section 157(6B) provides that:
If the Tribunal is satisfied that the claim of an applicant under subsection (2) or (3) is well-founded, the Tribunal must either:
(a) make an order specifying, in respect of the matters specified in the order, the charges, if any, and the conditions, that the Tribunal considers reasonable in the circumstances in relation to the applicant; or
(b) order that the applicant be granted a licence in the terms proposed by the applicant, the licensor concerned or another party to the application.
13 The Tribunal published reasons in respect of the separate questions on 15 July 2020 in Application by Isentia Pty Limited [2020] ACopyT 2. In this proceeding, these reasons are referred to as R1.
14 Streem and CAL resolved Streem’s application by agreement before the final hearing. Isentia and Meltwater proceeded to a final hearing of their applications. The Tribunal heard their applications on 8–26 February 2021, and 16, 18, 23 March 2021. The Tribunal published its reasons on 15 October 2021 in which it identified the terms of the licence it proposed to order be granted to Isentia and Meltwater, in Application by Isentia Pty Limited [2021] ACopyT 2. In this proceeding these reasons are referred to as R2.
15 Subsequently, on 25 October 2021, the Tribunal made orders in relation to each of Isentia and Meltwater as follows:
The Applicant is granted a licence in the terms set out in Annexure A to these Orders and the Tribunal so specifies under section 157(6B)(a) of the Copyright Act 1968 (Cth) as to the charges and conditions recited in Annexure A.
16 The objections to competency filed by Isentia and Meltwater relate to R1, not R2. The objections are made on the basis that CAL did not seek to challenge R1 published on 15 July 2020 within the time prescribed by s 11(3) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act), which provides for the making of an application within 28 days of the decision, or otherwise within a reasonable time given that this proceeding has also been commenced in reliance on s 39B of the Judiciary Act 1903 (Cth). CAL’s position is that it is entitled to challenge the orders resulting from R2 made on 25 October 2021 and has done so within time, which also necessarily involves a challenge to R1 to the extent it underpins R2.
17 There is a capacity for the 28 day time period under the ADJR Act to be extended under r 31.02 of the Federal Court Rules 2011 (Cth). Further, CAL’s rights of challenge arising from R1 and R2 require a detailed understanding of the substance of those reasons and the decisions the Tribunal made. Accordingly, the issue of the extension of time and competency have to be resolved after consideration of the substance of CAL’s challenges to the Tribunal’s orders of 25 October 2021.
18 CAL contends in ground 1 that the Tribunal committed an error of law or took into account an irrelevant consideration or failed to take into account a relevant consideration by having regard, in both rejecting CAL’s reliance on the 2016 Isentia Licence (as defined in R2 [124]) and the direct licences for The Australian and in assessing the reasonableness of charges and conditions to be imposed, to the market power said to be enjoyed by the copyright owners by virtue of their exclusive rights under the Copyright Act. According to CAL, the Tribunal ought to have confined its consideration of market power to any incremental market power accrued by reason of collective licensing arrangements between multiple copyright owners.
19 Ground 1 is referred to as the incremental market power ground.
20 CAL contends in ground 2 that the Tribunal committed an error of law by the legal unreasonableness of its decision to order that licences be granted having regard to the expansion of rights and diminution in charges under those licences compared to: (a) the 2016 Isentia Licence and the direct licences for The Australian relied upon by CAL, which the Tribunal regarded as affected by a kind of market power to which it ought not have had regard, (b) the 2014 Meltwater–CAL scraping licence (as varied in 2016), and (c) the increased online use of licensed works by Isentia and Meltwater, including the ingestion and/or communication by them of all of, or many of, the licensed works within CAL’s mandate.
21 Ground 2 is referred to as the unreasonableness as to charges ground.
22 CAL contends in ground 2A that the Tribunal’s decision is legally unreasonable having regard to the Tribunal’s reliance on the analysis of Mr Samuel as the sole basis for determining that the online monitoring service fee and the downstream licence fee should be imposed.
23 Ground 2A is referred to as the Mr Samuel’s ground.
24 CAL contends in ground 3 that the Tribunal had no power to impose, or alternatively it was legally unreasonable for the Tribunal to impose, licence terms which in substance and practical effect purport to require CAL to exceed its “mandate” to licence rights comprised in the copyright of its members and other principals.
25 Ground 3 is referred to as the mandate and other unreasonableness grounds.
26 It is conventional to provide an overview of the reasons for decision subject to challenge.
27 We depart from convention. R1 is 168 paragraphs. R2 is 864 paragraphs. The reader would get lost in any meaningful overview of the Tribunal’s reasons. It is better to deal with the reasons as relevant to the particular grounds of challenge. This also has the benefit of making these reasons less lengthy than would otherwise be the case.
5. THE INCREMENTAL MARKET POWER GROUND
28 CAL submitted to the Tribunal that while the “incremental market power” that CAL may have by reason of the aggregation of the rights of multiple copyright holders is a permissible consideration in the Tribunal’s decision-making process, the market power that an individual copyright owner might have by virtue of their exclusive rights under the Copyright Act is a prohibited or irrelevant consideration. As a result, the Tribunal should not have dismissed the 2016 Isentia Licence or the direct licences for The Australian as inappropriate comparators on the ground that they reflected the market power that an individual copyright owner might have by virtue of their exclusive rights under the Copyright Act.
29 The Tribunal did not accept CAL’s submission about incremental market power being the only relevant consideration to market power issues, saying at R2 [239] that the “text of s 157(3) and subparagraph (6B) is not subject to the qualification of incrementalism in the market power of the licensor”.
30 CAL would have it that this implied limitation arises from multiple matters, as follows:
(1) the fundamental policy of the Copyright Act is to confer certain exclusive rights on the copyright owner to the exclusion of all others;
(2) it is in the nature of copyright that it confers exclusive rights in relation to original subject matter; something for which there may well be no ready substitute;
(3) generally speaking, the Tribunal has no power to regulate the terms on which an individual copyright owner licenses its copyright works, noting the exception of certain mandatory statutory licences (determined by the legislature) for which the owner is entitled to equitable compensation;
(4) the purpose of Part VI is to confer on the Tribunal power to supervise the relationship between “licensors” as defined in s 136(1), which are, by reason of that definition, collective licensing organisations representing multiple copyright owners, and persons in need of licences;
(5) the possible impacts of other laws, such as the Competition and Consumer Act 2010 (Cth) (the Competition and Consumer Act), are matters to be dealt with elsewhere, in forums other than the Tribunal;
(6) this reflects the fact that the Tribunal was established to deal with cases where “a monopoly or quasi monopoly exists by reason of the role of a collecting society or equivalent licensing body” (CAL’s emphasis): Application by Australasian Performing Right Association Limited v Australasian Mechanical Copyright Owners Society [2009] ACopyT 2; (2009) 84 IPR 402 at [30];
(7) consistently with this, in Phonographic Performance Company of Australia Ltd v Copyright Tribunal of Australia [2019] FCAFC 95; (2019) 270 FCR 645 (PPCA) at [143] the Full Court said that “the policy and purpose of Part VI of the Act, which is to confer on the Tribunal power to supervise the relationship between collecting societies and persons in need of licences”;
(8) this risk of collective market power is the central concern of the ACCC guidelines to assist the Tribunal in the determination of copyright remuneration (the ACCC guidelines) to which the Tribunal must have regard under s 157A of the Copyright Act if requested by a party (and which, accordingly, the Tribunal misconstrued in this case);
(9) by putting the 2016 Isentia Licence and the direct licences for The Australian aside, the Tribunal sought to regulate the statutory “monopoly” of individual copyright owners indirectly through the mechanism of a collective licence, an approach which risks undermining the collective licensing system altogether (as any rational individual copyright owner will not be willing to expose itself to the risk that the Tribunal will determine licence terms and conditions that are contrary to the way it chooses to license its copyright, or generate a return that is less than what it would obtain by licensing the content directly);
(10) it is no part of the Tribunal’s function to interfere with, or seek to counteract, the power that individual copyright owners have by reason of the exclusivity they enjoy under the Copyright Act. The Tribunal risks disturbing the fundamental policy of the Copyright Act if it does so; and
(11) the correct and conventional approach was to focus on whether CAL, by virtue of the aggregation of the rights of numerous copyright owners, had some “market power” or bargaining power over and above that of any individual publisher which had been brought to bear. Once it is recognised that there was no evidence that CAL had, or exercised, such power, the competition-based concerns expressed by the Tribunal fall away.
31 CAL’s arguments in support of this ground do not adequately reflect the principle that the identification of mandatory relevant and prohibited irrelevant considerations, where not expressly identified by the statute, “must be determined by implication from the subject-matter, scope and purpose of the Act”: Minister for Aboriginal Affairs v Peko Wallsend Limited [1986] HCA 40; (1986) 162 CLR 24 at 39–40.
32 CAL’s arguments also improperly conflate the lawful monopoly rights provided by copyright with the (potentially undesirable and potentially unlawful) inefficiencies in a market in which there are no substitutes for a copyright work.
33 It is useful to begin with the facts. CAL, Isentia and Meltwater were proposing different licences as reasonable. In support of their competing case about what licence would be reasonable, they each adduced a wide range of evidence. One kind of evidence they adduced was other licences alleged to be comparable in some way to the licence sought by Isentia and Meltwater.
34 CAL argued that the licence it negotiated with Streem to settle Streem’s case was a directly comparable market transaction: R2 [49]. The Tribunal recognised that the comparability of the Streem licence would have to be determined: R2 [106(6)].
35 CAL also argued that the Tribunal should rely on a benchmarking exercise undertaken by Dr Eisenach. The Tribunal recognised that the cogency of Dr Eisenach’s evidence would have to be determined: R2 [106(7)].
36 CAL did not argue before the Tribunal that the 2016 Isentia Licence or the direct licences for The Australian were comparable licences. CAL can hardly complain now that the Tribunal did not treat them as comparable. This is particularly so given that, despite CAL’s case, the Tribunal in fact evaluated those licenses for potential comparability and rejected them.
37 The Tribunal recorded the conventional approach to its quasi-judicial valuation task at [245], citing Re Phonographic Performance Company of Australia Ltd under s 154(1) of the Copyright Act 1968 (Cth) [2016] ACopyT 3; (2016) 125 IPR 1 at [36] as follows:
First, if a market price is available then that price will be imposed. Secondly, if no direct market price is available, then an attempt will be made to determine what bargain the parties might have reached in a hypothetical negotiation (on a willing but not over anxious basis). Thirdly, if this is not possible then the Tribunal will examine comparable transactions to see whether they can throw any light on price. Finally, if that cannot be done, the Tribunal will engage in a process of judicial estimation which will involve a synthesis of the relevant facts and circumstances into a rate which the Tribunal regards as reasonable or equitable in the circumstances: see as to these four matters, Reference by Phonographic Performance Company of Australia Ltd under s 154(1) of the Copyright Act 1968 (2007) 73 IPR 162.
38 It will be apparent to those routinely involved in any form of judicial or quasi-judicial valuation exercise that in almost every case it is ultimately necessary for the decision-maker to undertake a synthesis of the relevant facts and circumstances to enable a judicial estimation of a market price which can be regarded as reasonable. In undertaking this synthesis, the decision-maker will consider a range of arguably comparable or non-comparable transactions. The present case is no different. The Tribunal assessed all of the potentially comparable transactions it had available to it. These included the 2016 Isentia Licence and the direct licences for The Australian.
39 This context is important. CAL’s argument is that in evaluating a transaction to ascertain its usefulness as a comparator for the licences sought by Isentia and Meltwater, the Tribunal was prohibited from considering whether the other transaction might be a result of an exercise of individual market power of the copyright owner. This in circumstances where the Copyright Act says nothing at all about: (a) the manner in which the Tribunal is to determine what might be reasonable in respect of a licence sought under s 157(3), and (b) the potential use of comparable and non-comparable transactions as part of the synthesis that might be undertaken for the Tribunal to reach an outcome it considers reasonable.
40 Importantly, this argument is not CAL saying that the Tribunal had no power to do what it did. It is CAL saying that when it came to evaluating the weight, if any, to be given to some transactions, the Tribunal was prohibited from asking itself if those transactions might be affected by a capacity of one or other party to have exercised particular market power at the time of the transaction. The inherent unlikelihood of the legislation implicitly hamstringing the Tribunal’s capacity to evaluate the weight to be given to a transaction potentially relevant to the assessment of the reasonableness of a licence should not be overlooked.
5.4 The subject matter, scope and purpose of the Copyright Act
41 Part of the critical statutory criteria enabling the making of an application to the Tribunal under s 157(3) is that of claimed “unreasonableness” and “reasonableness”. That is, the capacity to make an application is enlivened if the person claims “that in the circumstances it is unreasonable that the licence should not be granted” (s 157(3)(a)) and/or claims “that a licensor proposes that the licence should be granted subject to the payment of charges, or to conditions, that are unreasonable” (s 157(3)(b)). In that event, the Tribunal may make an order either “specifying, in respect of the matters specified in the order, the charges, if any, and the conditions, that the Tribunal considers reasonable in the circumstances in relation to the applicant” (s 157(6B)(a)) or that the applicant be granted a licence in the terms proposed by the applicant, the licensor concerned or another party to the application (s 157(6B)(b)).
42 It is difficult to discern from criteria as broadly expressed as “unreasonable” and “reasonable”, any implication that the Tribunal must not consider the extent to which any ostensibly relevant material (such as other possibly comparable licences) might be affected by any kind of market power, be it derived only from the ownership of copyright or from the aggregation of the copyright of multiple copyright owners.
43 CAL’s submissions conflate the function of the Tribunal in deciding the licence charges and conditions it considers reasonable if it is satisfied an applicant’s claim is well-founded as provided for in s 157(6B), which involves a licence from a licensor (in effect, a collecting body) to a person, with the manner in which the Tribunal might decide what is reasonable if the applicant’s claim is well-founded. CAL’s submissions also conflate the concept of copyright as conferring a lawful monopoly (which is correct) with the concept that every transaction between an individual copyright owner and another person must reflect only that lawful monopoly right and, not, for example, an inefficient market in which there are no substitutes for that right. Isentia put the point this way:
A “statutory monopoly” should not be conflated with an economic monopoly, and frequently does not confer any economic power or bargaining power. The fact that a copyright holder has exclusive rights does not immunise its conduct from other norms. It is not “free to license its copyright works on such terms as it sees fit” (AS[25]). Thus a copyright owner cannot engage in monopolistic conduct that contravenes the Competition and Consumer Act 2010. It cannot enter into an unfair contract. Its conduct, particularly if it involves a taking advantage of market power, may prevent a previous bargain from constituting a market rate. Its conduct may prevent a bargain from being “reasonable”.
44 The function of the Tribunal does concern a collecting body holding multiple copyrights from its members. The Tribunal also cannot purport to impose a licence on an individual copyright owner which has not empowered a licensor to license a copyright act in respect of a copyright work. Beyond this, if satisfied the applicant’s claim is well-founded, the Tribunal’s evaluation of what is reasonable is confined only by necessary implication from the subject matter, scope and purpose of the Copyright Act and the requirements of procedural fairness. The idea that in assessing the weight to be given to a transaction which might or might not be comparable, the Tribunal is not entitled to consider all circumstances relevant to the reasonableness of the transaction at the time it was made and currently is untenable. For example, if the transaction reflects a particular exercise of market power by the individual copyright owner which was possible at the time (but for example, might be impossible when the Tribunal comes to exercise its functions), then the Tribunal must be entitled to take that fact about the transaction into account. CAL’s argument purports to exclude any such consideration.
45 Nothing in the subject matter, scope and purpose of the Copyright Act supports CAL’s proposition.
46 The Explanatory Memorandum for the Copyright Amendment Bill 2006 (Cth) refers at p 3 to amendments to “implement the Government’s response to the Copyright Law Review Committee report on the Jurisdiction and Procedures of the Copyright Tribunal”. This report contains the following statements:
10.02 As the Competition Tribunal recently acknowledged:
a legislative purpose of the Copyright Tribunal in Australia is to act as a curb on potential abuse of the monopoly power or near monopoly power gained by a voluntary collecting society by aggregating the rights of individual copyright owners.
…
11.56 Nevertheless, the Committee believes that the jurisdiction of the Tribunal should not extend to transactional licences (subject to its majority recommendations at paragraph 11.100). The Committee took that view for two reasons.
…
11.59 The Committee considers that a monopoly arises ‘automatically’ from the nature of a collecting society because in Australia the society will typically administer licences in relation to a substantial number of works or other subject matter in a particular class, thereby restricting the possibility for users to seek to substitute an alternative product. Indeed, it is a necessary precondition to the successful operation of a collecting society for it to administer rights in respect of, at least, a substantial number of works or other subject matter.
11.60 In contrast, the Committee considered that the potential for an anti-competitive abuse to occur in the case of a transactional licence is very limited. That is, the Committee considered that a body (other than a ‘collecting society’) or natural person administering a transactional licence would rarely have the capacity to exercise a monopoly in the relevant market…
11.61 It is apparent, from the Committee’s outline of the background to the Tribunal, that the Tribunal’s jurisdiction in relation to non-statutory licences was principally developed to regulate possible abuses of monopoly by APRA, which was, and continues to be, a monopoly licensor of the performing rights in musical works. In other words, the jurisdiction of the Tribunal was largely justified in order to regulate possible abuses of a pre-existing monopoly. As the Committee noted above (at paragraph 11.11), that justification would equally extend to the licensing activities of other collecting societies which are, by their nature, a form of monopoly. Conversely, that justification sits uneasily with the Tribunal’s current jurisdiction in relation to particular transactional licences, which would rarely constitute a monopoly.
11.62 Secondly, the Committee considered that, for the rights of copyright owners to be maintained, limitations on those rights should be confined as far as possible to those clearly provided for under the relevant international treaties. In respect of those treaties, countries have taken different views regarding the extent of measures that can be taken to regulate the licensing of the works of a single author. As noted above, the UK did not extend the jurisdiction of its Copyright Tribunal in respect of the works of a single author because it considered that such an extension would be in breach of its obligations under the Berne Convention. However, other Members of the same convention, such as Australia and South Africa (and New Zealand prior to its 1994 Act), have so extended the jurisdiction of their copyright tribunals.
…
11.67 The Committee recommends that the jurisdiction of the Tribunal over non-statutory licences be confined exclusively to the review of licences administered by a collecting society, and that the Act be amended accordingly.
47 As a result, the Copyright Amendment Act 2006 (Cth) (the 2006 amendments) amended provisions of Pt VI to ensure that the jurisdiction of the Tribunal only applied to a “licensor” as defined in s 136(1) (in effect, a collecting body) and not an individual copyright owner. The previous definition of “licensor” included “the owner or prospective owner of the copyright in the work”. The 2006 amendments also included the introduction of ss 157(6) and (6A)–(6C) to cover all relevant cases of applications that may be made to the Tribunal.
48 This does not mean that a purpose of the 2006 amendments was to prohibit the Tribunal, in discharging its s 157(6B) functions, from asking itself whether particular transactions which might or might not be comparable to the licence sought by an applicant might be affected by a capacity of one or other party to the transaction to have exercised particular market power at the time of the transaction. It is impossible to imply that limitation. Assume that a party to a past transaction was in a position at the time of the transaction to exercise market power to the detriment of the other party to the transaction. The transaction would reflect that exercise of market power. Assume that at the time it was discharging its functions the Tribunal knew that the party which previously held market power no longer did so and the other party to the transaction in fact now held market power. CAL would have it that if the party holding the copyright is not a “licensor” within the meaning of s 136(1), but an individual copyright holder, the Tribunal must disregard both the previously held market power reflected in the transaction and the change in market power between the time of the transaction and the time the Tribunal is called upon to exercise its functions. This must be wrong.
49 The Copyright Law Review Committee report on the Jurisdiction and Procedures of the Copyright Tribunal suggests no such limitation. The 2006 amendments were recommended because the Committee did not consider that an individual copyright owner would be likely to have monopoly power in any event. The Committee was not suggesting that when it came to the Tribunal evaluating whether a particular transaction should be given weight or not by the Tribunal in assessing the reasonableness of licence charges and conditions, the Tribunal was prohibited from considering the possibility (rare though it might be) that an individual copyright owner did hold monopoly power or something approaching it and the transaction reflected that exercise of market power, with the consequence that the Tribunal might choose not to give that transaction any or material weight.
50 The Tribunal’s observations about market power at R2 [231]–[239] reflect a correct understanding of the statutory context, including its statement at R2 [233] that:
where there is a narrow concentration of rights owners such as two critical publishers of print and online news, one or more of such entities may, without aggregation, be in a position to exercise a significant degree of market power derived from the exclusive rights they enjoy in the relevant works.
51 The Tribunal was also right to say at R2 [235] that “if the terms as to the payment of charges or as to conditions are properly characterised as the expression of the market power of one or more copyright owners effected through the agency of CA as a licensor for the purposes of s 157(3) of the Act, such terms, so expressed, may be “unreasonable””.
52 The proposition that the possible impacts of other laws, such as the Competition and Consumer Act, are matters to be dealt with elsewhere, in forums other than the Tribunal, finds no support in the Copyright Act. The proposition seems to be that because the Competition and Consumer Act regulates unlawful uses of market power, the Tribunal is bound to disregard all questions of market power in assessing the material before it that might be relevant to its s 157(6B) function. This cannot be right. If it were right, the Tribunal would not be entitled to give no weight to a transaction between an individual copyright holder and a person even if the Tribunal considers that the transaction may well have involved an unlawful exercise of market power. Instead the Tribunal (apparently) would be able to consider every other fact, matter and circumstance relevant to the utility of the transaction for the discharge of the Tribunal’s s 157(6B) function, but not whether the transaction involved an exercise of monopoly or near monopoly power by the individual copyright holder. Of course, the Tribunal’s consideration does not involve it in determining market power issues as if it had jurisdiction under the Competition and Consumer Act. That may be accepted. But nothing stops it making intermediate factual findings as part of its functions under Pt VI of the Copyright Act.
53 The ACCC guidelines do not support CAL’s arguments. The Tribunal dealt with the ACCC guidelines at R2 [42]–[43], [106(4)], [304]–[307], and [636(1)]. CAL would have it that the central concern of the ACCC guidelines is “the risk that a collecting society might wield some monopoly power over and above that which individual copyright owners might have through the aggregation of the rights of multiple copyright owners in a single collecting society” and indicate that “regard should be had to the terms of direct licences; ie, licences between individual copyright owners and licensees” in determining remuneration.
54 CAL’s submissions involve an over-simplification. The Tribunal’s consideration of the ACCC guidelines reflects their actual terms, in particular that they are intended to provide “insight into the economic framework that the ACCC considers could reasonably be adopted, and the approaches that can be used in applying that framework” in relation to remuneration (Executive Summary). The guidelines record that collective licensing raises “concerns about the potential creation and exercise of market power, resulting in excessive licence fees or restrictive non-price terms and conditions”, with the Tribunal intended “to act as a constraint on the exercise of market power by collecting societies, by making decisions with respect to the reasonable terms and conditions of copyright licences, including licence fees”. The guidelines say that in some markets “collective licensing may be constrained by the availability of substitutes such as direct licensing”, but the “ACCC considers that the methodology proposed in these guidelines can provide a counterbalance to any market power of collecting societies in the provision of blanket licences” (Collective licensing). The substance of the guidelines includes the following:
Constructing a hypothetical bargain
The focus of the pricing principles set out in these guidelines is on constructing a hypothetical bargain between a licensor and licensee with equal bargaining power.
…
Benchmarking
The ACCC notes that the hypothetical bargain approach may not always be practical as it may be too costly or difficult in some circumstances. Benchmarking is an alternative that can be used and this involves the use of appropriate existing rates as a source of information for determining reasonable remuneration. Appropriate benchmarks may include:
1. the existing rate for the licensing of the material
2. rates or tariffs paid for the use of the same copyright material in different uses
3. rates or tariffs paid for the use of similar copyright material in other jurisdictions, and/or
4. rates of tariffs paid in comparable, more competitive markets.
…
1. Introduction
…
The Copyright Tribunal was established to deal with cases where a monopoly or quasi monopoly exists by reason of the role of a collecting society or equivalent licensing body.
…
1.1 Scope and purpose of the Copyright Guidelines
The ACCC considers that the Copyright Guidelines should focus on providing a framework that focuses on countering any market power held by collecting societies and providing material to assist parties preparing economic evidence to support their claims.
…
2. Collective licensing
…
To the extent that direct licensing, or the potential for direct licensing, can provide a competitive constraint, this may ameliorate the potential issues arising from collecting societies’ market power. Care should therefore be taken to ensure that current and future licensing practices do not dampen incentives for direct licensing.
…
3.2 Direct licensing
…
As a broad principle, the ACCC considers that collective licensing of copyright material via blanket licences should not impede efficient direct licensing. The ACCC considers that competitive market solutions are preferable in general and should be encouraged where possible. If licensees have the option of negotiating a licence directly with the copyright owner, it is likely to place some competitive constraint on collecting societies in setting blanket licence terms and conditions.
…
3.3 Collecting societies and market power
3.3.1 Market power and pricing
…
… the approaches to determining remuneration set out in Part B of these guidelines are primarily designed to counter the market power of collecting societies and lead to pricing outcomes that are closer to those that would have prevailed had competition existed between copyright owners.
…
4.2 Pricing methods
4.2.1 The ACCC’s recommended approaches
The ACCC notes that the Copyright Tribunal has considered a range of approaches in making pricing determinations, including benchmarking, construction of a hypothetical bargain and judicial estimation (which takes into account a range of factors).
Of these broad approaches, the ACCC recommends the following methods as appropriate for pricing copyright materials, if feasible in the circumstances of the particular case:
• benchmarking – using appropriate rates (which should preferably, as far as possible, be grounded in a more competitive market) as a source of information for determining remuneration
• Construction – constructing a hypothetical bargain between a willing, but not anxious, licensor and willing, but not anxious, licensee by applying an economic model to construct an appropriate licence fee level.
…
5. Benchmarking
The benchmarking approach uses appropriate existing rates as a source of information for determining reasonable remuneration. In accordance with the objective of addressing market power, the benchmarking approach is about finding price indications that are more reflective of competition than may be the case for blanket licences.
…
5.2 Existing rate
Existing rates for the particular copyright material in question may be an appropriate benchmark for determining reasonable remuneration. However, existing rates will be less appropriate if they reflect the exercise of market power. Market power may affect rates even if those rates are determined by arms-length negotiation between the collecting society and licensee(s).
…
55 It will be apparent that while CAL is right that the Tribunal exists in part to ensure that collective licensing does not lead to exercises of inappropriate market power, CAL is wrong that the ACCC guidelines reflect the view that direct licences (ie, licences from individual copyright owners) always involve an appropriate exercise of market power. The ACCC guidelines expressly recognise that direct licences might themselves embody an inappropriate exercise of market power. This is why, for example, the ACCC guidelines say: (a) the hypothetical bargaining approach assumes equal market power, and the guidelines focus on “efficient direct licensing” (that is, where competition exists between copyright owners), (b) benchmarking rates should “preferably, as far as possible, be grounded in a more competitive market”, (c) benchmarking “is about finding price indications that are more reflective of competition than may be the case for blanket licences”, and (d) existing rates “will be less appropriate if they reflect the exercise of market power”.
56 The Tribunal rightly recognised these aspects of the ACCC guidelines at [304]–[307], and was right to be mindful of the nature of the market in which MMOs operate, including the lack of substitution for particular titles: R2 [307(4), (8), and (14)]. CAL’s submission that the Tribunal misconstrued the ACCC guidelines and thereby failed to have regard to them is untenable.
57 Contrary to CAL’s submissions, it is CAL’s case, to the effect that the Tribunal must disregard any possible exercise of individual market power when considering allegedly comparable transactions, which threatens to undermine the statutory scheme, not the case of the MMOs. If CAL is right, the Tribunal would be bound to disregard the effects of inappropriate (and even potentially illegal) exercises of market power by an individual copyright owner in evaluating the weight that should be given to any particular transaction. It is not a fundamental policy of the Copyright Act to entrench inappropriate or potentially illegal exercises of market power by an individual copyright owner as a proper benchmark for the evaluation of reasonable charges for collective licensing arrangements. To so conclude would be irreconcilable with one of the reasons for the Tribunal’s existence, being to ensure that collecting societies cannot engage in monopoly or quasi-monopoly pricing. If, for some reason, an individual copyright owner can engage in monopoly or quasi-monopoly pricing by reason of the lack of substitutes for its product, that is not a result only of its lawful copyright. It is a result of an inefficient market with insufficient substitutes for the copyright material such as to create a competitive dynamic. For the Tribunal to be bound to disregard those circumstances would be for it to perpetuate prices which are an outcome of market inefficiencies.
58 Leaving aside the fact that no party proposed that the Tribunal rely on the 2016 Isentia Licence or the direct licences for The Australian as appropriate comparators, the Tribunal carefully analysed the market circumstances which underlay those transactions. In so doing, it exposed why those transactions were an outcome of an inefficient market with insufficient substitutes for the copyright material such as to create a competitive dynamic.
59 The Tribunal’s analysis exposed that (amongst other things):
(1) one of the individual copyright owners, News Limited (News Corp), wanted CAL to achieve a trebling of the fees it derived from CAL licensing News Corp’s copyright works to Isentia: R2 [132];
(2) the Chief Executive Officer of CAL accepted that the negotiation of 2016 Isentia licence did not represent CAL’s “finest hour” as CAL was doing no more than giving effect to News Corp’s demands: R2 [134];
(3) News Corp’s demand were then taken up by Fairfax Media Limited: R2 [135]; and
(4) News Corp has unique market power over media monitoring organisations because any media monitoring organisation needs access to The Australian due to its popularity: R2 [164] and [166].
60 CAL’s proposition that there was no evidence that CAL had or exercised market power over and above that of any individual copyright owner misses the point. The point is that if an individual copyright owner has monopoly or quasi-monopoly power it is not in that position merely because it has copyright. It is in that position because the market in which it operates is inefficient due to the lack of substitutes. The notion that the Tribunal must exercise its functions to entrench the inefficiencies in that market finds no support in the subject matter, scope or objects of the Copyright Act.
61 These facts underlie the Tribunal’s conclusion at R2 [219] that the:
licence fee payable under the 2016 Isentia Licence to News Corp is the expression of the market power News Corp enjoyed in The Australian and The Weekend Australian to substantially increase the revenue it wanted to receive attributable to Isentia, unconstrained by rivalry and substitution possibilities.
62 In these circumstances, the Tribunal’s statement also at R2 [219] that the “2016 Isentia Licence does not assist the Tribunal in determining whether the terms as to the payment of charges contained in the CA Licence or the Alternative CA Licence or the Amended Alternative CA Licence are reasonable” reflects a conclusion based on a correct understanding of the statutory scheme and is not open to legal challenge. The same conclusion must be reached in respect of the Tribunal’s approach to the direct licensing of The Australian (which was considered in the report of Dr Eisenach, but not otherwise relied on by CAL as involving a comparable transaction). The Tribunal made no error of law when it accepted at R2 [538] that there are no substitutes for The Australian and any bargain about The Australian is not reflective of a bargain between a willing but not anxious licensor and a willing but not anxious licensee.
63 For these reasons, ground one of the application must be rejected.
6. THE UNREASONABLENESS GROUND AND THE MR SAMUEL’S GROUND
64 According to CAL, the Tribunal’s process of reasoning and conclusions were legally unreasonable in that:
the Tribunal did not undertake any assessment of the practical effect of the charges that would be payable under the licences proposed by Isentia and Meltwater relative to previous arrangements and other industry licences, considered in the context of the nature and scope of the licensed rights, the increased online use of licensed works by Isentia and Meltwater, and the proposed conditions of the licences.
65 CAL submitted that this was demonstrated by such matters as:
(1) the fact that the scope of the licensed rights pursuant to the licences proposed by CAL, and those sought by Isentia and Meltwater, had expanded relative to the previous arrangements, and the online use of licensed works by Isentia and Meltwater pursuant to the terms of the licences had increased significantly;
(2) the charges actually payable by Isentia and Meltwater for the use of the licensed works under the licences ordered by the Tribunal [REDACTED] despite the increased online use of licensed works by Isentia and Meltwater, even allowing for the fact that certain publications have been withdrawn from CAL’s mandate;
(3) the Tribunal did not consider how the charges it proposed to order compared with those which had been paid for the same or similar uses under previous licences between the parties and other industry licences (including the 2016 Isentia licence and the direct licences for The Australian and the “scraping licence” entered into by CAL and Meltwater in 2014 and varied in 2016 despite making no finding that this latter arrangement was affected by “market power” considerations), but instead applied a novel approach based solely on the profits of the licensees, which turned upon a “rule of thumb” as to the proportion of those profits that should be paid which was irrational (that is, Mr Samuel’s approach);
(4) [REDACTED]
(5) the fact that the previous licences and other industry licences did not feature at all in the Tribunal’s approach to determining the online and downstream components of the charges.
66 [REDACTED]
67 CAL accepted, however, that legal unreasonableness is not established merely by reason of emphatic disagreement with the Tribunal’s decision: Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at [40]. This principle is critical given that, on analysis, CAL’s complaints involve nothing more than emphatic disagreement with the reasonableness of the Tribunal’s determination.
68 CAL supported its legal unreasonableness argument on the basis of the Tribunal’s asserted errors in dealing with the 2016 Isentia licence and the direct licences for The Australian. Those asserted errors have been considered and rejected above.
69 It is also relevant that the Tribunal referred to the evidence that the 2016 Isentia licence fee caused Isentia’s revenue and profits to steadily decline with Isentia making a loss in the six months to 31 December 2020 and its share price declining from $3.88 to $0.10: R2 [218]. Meltwater said that Isentia’s 2016 licence fee also caused Meltwater irreparable harm as it meant that Meltwater also ended up paying significantly higher licence fees than had been the case: R2 [218]. These are practical effects of the charges that would be payable under the licences proposed by Isentia and Meltwater.
70 CAL would have it, however, that the only relevant practical effects are the effects on it and its members resulting [REDACTED]. CAL’s proposition, that the Tribunal did not consider or, perhaps, recognise, that its determination involved [REDACTED] is untenable. It disregards the way in which the parties put their competing cases to the Tribunal and the detailed reasons the Tribunal gave in support of the conclusions it ultimately reached.
71 Amongst other things, the Tribunal recognised the relevance of the fact that two prominent works, The Australian and the Australian Financial Review (and their associated titles), had been withdrawn from CAL’s licensing capacity altogether for the purpose of the Tribunal’s decision: R2 [109]–[122]. In this latter respect, the Tribunal noted that CAL “does not contest the proposition that these titles are important titles for a licensee seeking to provide media monitoring services”: R2 [112]. In this appeal CAL seeks to downplay the significance of the loss of these titles, but it is apparent that the Tribunal accepted the evidence before it that “any organisation seeking to provide a media monitoring service in Australia (print and online) must have access to the content of The Australian” (R2 [164]) and that such access would have to be (and was) the subject of separate negotiations and a separate fee: R2 [113], [122].
72 Further, CAL’s submissions fail to recognise that the Tribunal did not accept CAL’s case of vastly increased usage of the licensed content and the “centrality of ingestion to the services offered by Isentia and Meltwater and the extent of the use of that content, particularly with respect to online content”. The Tribunal was not legally bound to accept CAL’s case. It took into account that not all ingested content is communicated to a reader, despite the act of ingestion itself being an initial act of copying or reproduction: R2 [311]. It took into account the difference between the “tagging” of online content and the communication of a portion of the online content to the reader: R2 [325]–[326]. It took into account that many publications provide little of relevance or commercial value to the MMOs’ operations: R2 [388], [390]. It took into account that the MMOs had to license the entire CAL repertoire which includes works that the MMOs do not wish to license: R2 [389]. It ultimately concluded at R2 [778(12)] that:
As to the approach to identifying the relevant compensable conduct, that is, the conduct attracting the payment of a licence fee, we do not accept that the correct approach is to identify, in effect, a mosaic of conduct and to try and attribute a fee to each and every part or step making up the total image. The proper inquiry is to identify the substance of the licence relationship… the fee ought to represent a reasonable fee directed to the acts of substance of reproduction and communication not each and every intermediate step that may or may not engage an exercise of a right conferred on the copyright owner, by the MMO on the way to each licensee exercising the two functions for which the licence exists.
73 It was reasonably open to the Tribunal to approach the issues in this manner.
74 CAL also submitted that the Tribunal paid no regard to the “scraping licence” entered into by CAL and Meltwater in 2014 as varied in 2016 despite making no finding that this arrangement was affected by “market power” considerations. Again, however, no party suggested to the Tribunal that the Tribunal should rely on the scraping licence as a comparable transaction. In these circumstances, the fact that the Tribunal did not rely on the scraping licence cannot involve error. In common with a number of its arguments in this appeal, CAL’s challenges to the validity of the Tribunal’s decision involve an attempt to reconstruct the case it put before the Tribunal. Meltwater put this point as follows:
[CAL] had previously relied almost entirely on the Streem licence as a market price, and on a “benchmarking” analysis prepared by its expert witness, Dr Eisenach, which the Tribunal rejected. On appeal, CAL barely even acknowledges the existence of the Streem licence (see AS [12]); and Dr Eisenach has now been reduced to a footnote (AS [54]). Instead, now front and centre are CAL’s previous licences with the MMOs, and a comparison of the fees payable under those licences with the fees now payable under the licences ordered by the Tribunal. No submissions were made on that point below. The percentages and figures relied on repeatedly in AS were not recorded once, by any of CAL’s 10 witnesses. To the contrary, CAL submitted the fee ordered should not be referable to the previous licences. Dr Eisenach did not take them into account in his analysis.
…
To the extent the matters now emphasised by CAL are not the subject of the Tribunal’s focus in its reasons, that is the result of deliberate forensic decisions CAL made.
75 CAL should not be permitted to disregard the case it put before the Tribunal in its search for legal error in this appeal.
76 CAL’s case also refuses to recognise that the Tribunal, having rejected the 2016 Isentia licence and the direct licences for The Australian (which CAL did not rely on as comparable transactions in any event), was left with the case which CAL did run based on the Streem licence and Dr Eisenach’s evidence. The Tribunal gave detailed consideration to both aspects of CAL’s case.
77 The Tribunal’s analysis of the Streem licence extended from R2 [391]–[517]. In its conclusions at [516] the Tribunal stressed that:
(1) the “Streem FSMM Licence is not an example of a discreet [sic] market rate or market bargain because it only exists at all due to the interdependencies with the Settlement Deed and the Deed Polls”: [516(1)];
(2) the “applicants correctly emphasise the role of the Deed Polls in the Streem negotiations and the ultimate arrangements with Streem. [REDACTED]; and
(3) [REDACTED]: [516(10)].
78 In these circumstances, the Tribunal’s conclusion at R2 [517] rejecting the Streem licence as a non-comparable market bargain is legally unassailable. CAL does not challenge the Tribunal’s analysis or its conclusion about the Streem licence.
79 The Tribunal’s analysis of Dr Eisenach’s evidence was also extensive, including at R2 [518] and from [521] to [553]. CAL does not challenge the Tribunal’s analysis or its conclusion about Dr Eisenach’s evidence.
80 The Tribunal did not then simply adopt the only evidence left standing, being the work of Mr Samuel (although, having so roundly rejected CAL’s evidence, it might have been entitled to do so). Rather, the Tribunal evaluated each of the three licences CAL proposed was reasonable at R2 [554]–[596]. Its evaluation included that the first CAL licence was not supported by any evidence and included figures seemingly “pulled out of the air”: R2 [562]. The second alternative licence was based on the non-comparable Streem licence and Dr Eisenach’s evidence which was “not based on an informed understanding of the detailed foundational facts of the exchanges in which the agreement came to pass”: R2 [565]. The third amended alternative licence was considered by the Tribunal to be “very problematic indeed” including because it was no more than an element of an offer to settle the proceedings on the basis of a particular deed not available unless the relevant proceeding is settled: R2 [594].
81 The Tribunal then turned to the licence proposals of the MMOs and the evidence of Dr Pleatsikas (an expert economist called by Isentia) and Mr Ross (a forensic accountant called by CAL): R2 [597]–[619] and [621]–[639]. This analysis all preceded the Tribunal’s evaluation of the evidence of Mr Samuel, which commences at R2 [640].
82 In evaluating the evidence of Mr Samuel, the Tribunal said that:
(1) “Mr Samuel is highly experienced in the discipline of forensic accounting and the various methodologies applied in valuing assets and in assessing whether proposed fees for the grant of a licence of intellectual property rights reflect a reasonable fee”: R2 [640];
(2) Mr Samuel identified a number of available approaches including a “market approach, which considers the royalty by reference to other transactions in the market [Method 1]” and “an income approach, which has regard to the incremental cash flows to be derived from the IP [intellectual property] and, in some circumstances, the profitability of the licensee [Method 2]”: R2 [645(a)–(b)];
(3) methods 1 and 2 are both recognised as acceptable in “International Valuation Standards 210 Intangible Assets” (IVS 210): R2 [647]; and
(4) in IVS 210, method 2 is based on a split of profits that would hypothetically be paid in an arm’s length transaction by a willing licensee to a willing licensor for the rights to use the subject intangible asset: R2 [647].
83 The Tribunal then dealt with method 2, the “income” approach noting, amongst other things that (emphasis added by Tribunal):
(1) an important aspect of the income approach is the underlying fundamental valuation concept that the value of any asset is the value of the future cash flows which will be derived from its use: R2 [651];
(2) Mr Samuel said that the “allocation of profits between licensor and licensee for the purpose of determining a reasonable royalty is ultimately a matter of judgment. In my experience, a widely used starting point for allocating profits is to attribute a 25% share of the profit to the licensor”: R2 [653]; and
(3) Mr Samuel said that “[s]ome valuers use this 25% share as a rule of thumb, however I stress that it should be no more than a starting point. Various factors will impact whether the share should be higher or lower than this. …”: R2 [654].
84 The Tribunal next dealt with the detail of Mr Samuel’s analysis of historical payments by the MMOs to CAL under the income approach and expected fees to be paid under the MMOs’ proposed licence arrangements. This analysis founded Mr Samuel’s conclusion as identified at R2 [691] for Meltwater that:
The consequence of the Meltwater Amended Proposed Licence is that:
(a) the actual licensing costs would represent [REDACTED]; and
(b) Meltwater would have paid approximately [REDACTED].
85 Mr Samuel’s analysis for Isentia was identified at R2 [713] in these terms:
…the consequence of the Isentia proposed licence is that for the financial year ending 30 June 2019 Isentia would have paid approximately [REDACTED] of its profits before licensing costs and impairment costs as licence fees. Mr Samuel observes that this is [REDACTED] and he expresses the opinion that [REDACTED] is at the high end of the proportionate profit that could be considered reasonable.
86 Following a detailed discussion of the balance of Mr Samuel’s evidence and the criticisms of his evidence by Mr Ross and Dr Eisenach, the Tribunal said this at R2 [777]:
Having extensively reviewed the evidence of Mr Samuel, his various reports, the evidence of Mr Ross and the reports of Dr Eisenach, we find that we are assisted by Mr Samuel’s analysis both as to matters of principle and in terms of the utility of the calculations he has undertaken.
We accept the evidence of Mr Samuel.
87 In these circumstances, the notion that the Tribunal did not fully appreciate that it was [REDACTED] cannot be accepted. The bulk of the Tribunal’s analysis is focused on the unreasonableness of the fees which the MMOs had been paying since 2016 as a result of numerous factors including the exercises of market power by the individual publishers and CAL which the Tribunal (reasonably and legitimately) characterised as resulting not from the simple fact of copyright, but from the lack of substitutes in the market for critical works such as The Australian. It is this analysis which underpins the Tribunal’s conclusion that “it would be unrealistic and thus unreasonable not to recognise the burden imposed upon Isentia by the CA licence fee and the impact it has had upon Isentia’s ability to operate a sustainable business”: R2 [218]. It also underpinned the Tribunal’s view at R2 [307(4)] that in negotiating the 2016 Isentia licence, CAL acted as “an intermediary to reinforce the monopoly rent seeking of the publishers rather than each acting as a constraint upon the other”.
88 It necessarily follows that the Tribunal understood what it was doing and intended to ensure that the charges it imposed did not reproduce or continue the “monopoly rent seeking of the publishers”. In so doing the Tribunal was cognisant of the position of CAL and its members including with respect to the ““massive expansion” of online published content”, the “decline in print publishing and a corresponding movement of advertisers away from print publishing”, ““fundamental changes”… in the publishing industry” resulting in increased prices (R2 [294]), “the effect of disruption to the historical business model in which advertisers contributed significantly to revenue”, “the challenges presented by the use of news alerts and news services by Facebook and Google” (R2 [303]), and the marginal cost to the publishers of supplying copyright material to the MMOs (R2 [307(16)]).
89 If a consequence of the Tribunal’s decision is the need for repayments or credits given the charges under the interim licences which, in effect, preserved the status quo, then that does not indicate any legal unreasonableness in the Tribunal’s reasoning processes or conclusions. The Tribunal did not have to calculate the quantum of any possible repayment or credit for its decision to be legally reasonable. No one put that to the Tribunal and nor did anyone provide it with the evidence necessary to make the calculation. Nor do we have to undertake that exercise. The quantum of any possible repayment or credit remains in dispute and is for the future consideration of the Tribunal.
90 CAL also complains that it was illegitimate for the Tribunal to conflate CAL’s percentage of “overall revenue” approach as the basis for a licence fee with Mr Samuel’s incremental income approach. According to CAL, the Tribunal had neither found it was appropriate to use the MMOs’ total revenue and total costs nor provided a reasoned basis of why this would be so. CAL’s practical concern in this regard is that an MMO’s profits are a product of total revenues and total costs, and not those profits attributable to the use of the licensed works. The costs of an MMO doing business are within the MMO’s control. A licence fee based on a percentage of profits, as opposed to revenues, would expose publishers to the inefficiencies of any MMO’s method of doing business. CAL fears it will be at the “mercy” of the MMOs’ treatment of costs and expenses.
91 CAL’s criticisms do not fairly reflect the Tribunal’s process of reasoning. It is clear that the Tribunal understood that Mr Samuel’s income approach, at the level of principle, involved identifying the incremental cash flow benefits to be derived from the use of the copyright works. This point appears repeatedly in the Tribunal’s reasons including, for example, at R2 [649(a)] and [650]. The Tribunal identified that Mr Ross had criticised Mr Samuel’s calculations as not being based only on the proportion of incremental revenue derived from the rights, but from all revenue R2 [719]. Mr Samuel had responded to this criticism in his evidence, saying that:
(1) the rights being licensed by CAL and other licensors are essential inputs to the revenue generating ability of the MMOs;
(2) in its proposed licences, CAL had used a percentage of revenue approach based on all gross revenues of the MMOs; and
(3) the terminology applied to the method was immaterial – the relevant point is that for a licence fee to be reasonable it must have regard to the consequences of the fee on the licensee which requires consideration of total revenues and total costs.
92 It is evident that the Tribunal understood Mr Ross’s criticisms and Mr Samuel’s response. The Tribunal said at R2 [775(1)] that CAL itself had applied a form of “but for” reasoning to the MMOs’ revenue, that all of their revenue, in effect, derived from the licensed works. The Tribunal recognised that Mr Samuel’s point was that if all revenue was derived from the licensed works, then all costs also had to be taken into account. The Tribunal said at R2 [775(1)] that it accepted that if all revenue was treated as derived from the licensed works (CAL’s position) then all costs also had to be taken into account. CAL emphasised the contingent “if” in this statement in support of its position that the Tribunal did not in fact find it was appropriate to use all revenue. This is unrealistic. The Tribunal accepted Mr Samuel’s evidence at R2 [777]. In so doing, it accepted the pragmatism of his approach that if it was good enough for CAL to propose that all revenue of the MMOs was derived from the copyright works, then it was also necessary to bring to account all costs of the MMOs. The Tribunal was also cognisant of the fact that Mr Samuel had adopted the same pragmatism in respect of matters against the MMOs’ interest in a manner favourable to CAL. Accordingly, as the Tribunal said at R2 [775(16)]:
First, Mr Samuel attributed no profit at all to the value-added services by each of Isentia and Meltwater. Second, he attributed no profit at all to the other licences. Third, he excluded from Isentia’s EBIT figures [REDACTED] because he could not determine whether those costs related to the media monitoring business. Mr Samuel emphasised that all of these three considerations were material and they were all conservatively treated in CA’s favour.
93 CAL’s reliance on the Tribunal’s statement at R2 [778(11)(a)] that it took “the view that it is fundamentally important to connect a licence fee directly to the revenue derived from exercising the licensed rights” is misplaced. The point the Tribunal was making (at R2 [788(11)] was that if it was to:
take the view that the licence fee structure ought to operate on the footing of a fee based on a percentage of revenue (irrespective of the content delivery method thus, in effect, extinguishing the distinction between a press clip and an online service), a number of fundamentally important considerations are immediately engaged.
94 The Tribunal did not adopt that view, however, so the contingent “if” operates in this example. The Tribunal did not do so because it could not practically make all of the necessary adjustments which would be required to ensure that such an approach resulted in a reasonable charge: R2 [778(14)]. Instead, it adopted Mr Samuel’s view based on a percentage of profits assessed by reference to all revenue and all costs. It did so because it considered that his approach was acceptable in principle, had utility, and was practically capable of being implemented to reach a reasonable outcome: R2 [777].
95 The Tribunal was entitled to accept Mr Samuel’s opinions. It did not have to reason (expressly or implicitly) that the total revenues and total costs of an MMO would yield a reasonable proxy for that part of the revenue derived from use of the copyright works. It was reasonably open to the Tribunal to adopt Mr Samuel’s pragmatic approach of accepting CAL’s proposed total revenue approach (that all revenue was derived from use of the copyright works), applying to this the MMO’s total costs to derive profit, and testing the various licence proposals to ascertain if they yielded a licence charge more or less than 25 per cent of the MMO’s profits. It is also important to understand that Mr Samuel’s approach did not simply adopt the 25 per cent of profits rule of thumb. That is an inaccurate generalisation. Mr Samuel used the 25 per cent of profit as a starting point for his assessment of the reasonableness of the various proposals: R2 [654]–[656]. The licence proposals of the MMOs resulted in licence fees [REDACTED], as the Tribunal recognised: R2 [619] and [713].
96 As Isentia also pointed out, in addition to all of these matters, the Tribunal also considered the pre-2016 licence fees (R2 [124], [128], [861]) and 25 examples of direct licences between Isentia and copyright owners (R2 [614]). It stressed at R2 [615] that its task was to determine whether the overall fee proposal in the various proposals is reasonable or unreasonable. It must also be accepted that the Tribunal was entitled to structure its consideration around the competing cases put by the parties.
97 Contrary to CAL’s submissions, Audio-Visual Copyright Society Ltd v Foxtel Management Pty Ltd [2012] ACopyT 1 at [173] does not undermine the legitimacy of the Tribunal’s approach. In that matter the Tribunal said:
Fourthly, Foxtel’s profitability (or otherwise) is immaterial. We do not accept Screenrights’ submission that the previous Tribunal relied on Foxtel’s lack of profitability to support its conclusions. The Tribunal’s reasons at [403] do not support this submission. The previous Tribunal referred to profitability for the sole purpose of rejecting specific costs evidence which had been placed before it. It did not determine equitable remuneration by reference to profitability or otherwise. As Foxtel submitted, it is difficult to see how an entity’s profitability could affect the price that might be negotiated in a hypothetical bargain. The unprofitable entity might wish to offer less for a service than it might otherwise but the assumed hypothetical bargain pre-supposes a meeting of minds of both parties about price. The seller of the service will not accept less by reason of the buyer’s poor profit just as the buyer will not pay more merely because it is profitable.
98 The context in which these observations were made is important. The point was that it was not the case that the previous licence fees reflected Foxtel’s then lack of profitability. There was no evidence explaining how the fact that Foxtel was making a profit by the time the matter came before the Tribunal again could be relevant to the hypothetical bargaining approach. There is no suggestion in the reasoning that, in determining reasonable remuneration for the use of copyright works, the testing of reasonableness of remuneration by reference to potential profit sharing is illegitimate. In the case of Foxtel the retransmission of the free-to-air rights was also a miniscule portion of Foxtel’s overall business. In the present case the copyright works are essential to the MMOs’ businesses.
99 CAL complained that the Tribunal did not consider the reasonableness of the proposed charges in the context of the scope of rights and the conditions of the licences, aside from a conclusory statement that the terms as to charges and non-price terms “cohere”: R2 [850]. Again, this is an unfair characterisation of the Tribunal’s lengthy and detailed process of reasoning. At R2 [850] the Tribunal accurately recorded that:
We are satisfied that the claim of the applicants that each of them requires a licence as proposed and that CA has refused or failed to grant the licence or to procure the grant of the licence, and that in the circumstances it is unreasonable that the licence should not be granted, is “well-founded”. The relevant circumstances are all of the circumstances described extensively in these reasons. We have examined carefully all of the terms of the licences proposed by the applicants and the debate about those terms and particularly the non-price terms. We do not propose to examine each of the non-price terms textually in these reasons and the debate about them. As mentioned, we take the view that the claims of the applicants are well-founded and that the terms as to charges and the non-price terms cohere.
100 For these reasons, grounds 2 and 2A must be rejected.
7. THE “MANDATE” AND OTHER UNREASONABLENESS GROUNDS
101 CAL and the intervening parties contended that the Tribunal’s orders involved the Tribunal acting in excess of its power under s 157(6B) of the Copyright Act or otherwise legally unreasonably because its orders result in a licence beyond the scope of CAL’s own authority from its publisher members to grant.
102 Section 157(6B)(a) and (b) respectively empower the Tribunal, if satisfied that a claim of an applicant under s 157(2) or (3) is well-founded, to “make an order specifying, in respect of the matters specified in the order, the charges, if any, and the conditions, that the Tribunal considers reasonable in the circumstances in relation to the applicant” or “order that the applicant be granted a licence in the terms proposed by the applicant, the licensor concerned or another party to the application”. Sections 157(6B)(a) and (b) operate disjunctively.
103 On 25 October 2021 the Tribunal made orders as follows in respect of each of Isentia and Meltwater as applicants:
1 The Applicant is granted a licence in the terms set out in Annexure A to these Orders and the Tribunal so specifies under section 157(6B)(a) of the Copyright Act 1968 (Cth) as to the charges and conditions recited in Annexure A.
2 The commencement date of the licence, as specified in Order 1 of these orders, is 15 October 2021, being the date of publication of the decision of the Tribunal in the proceeding.
104 Annexure A to each order is a “Press Monitoring and Online Monitoring Licence” between Isentia or Meltwater (as the case may be) and CAL.
105 Notwithstanding how the Tribunal’s orders of 25 October 2021 were framed, it should not be assumed that in its orders the Tribunal was not making an order specifying that the MMOs be granted a licence under s 157(6B)(a).
106 The Tribunal’s power under s 157(6B)(b) is confined to the making of an order that the applicant be granted a licence on terms proposed, in effect, by a party to the application. That is, for s 157(6B)(b) to be engaged, the Tribunal must accept the whole of any licence proposed by a party. If the Tribunal concludes that it is not appropriate to order the grant of a licence on the precise terms proposed by any party, the Tribunal (if otherwise satisfied the claim of the applicant is well-founded) is necessarily acting under s 157(6B)(a). The fact that s 157(6B)(a) does not refer to the Tribunal ordering the grant of a licence (as in s 157(6B)(b)) does not mean that under s 157(6B)(a) the Tribunal is not able to specify in the order that the applicant be granted a licence. That capacity is within the scope of the words “in respect of the matters specified in the order”.
107 The matter the Tribunal specified in the order of 25 October 2021, in terms, was that each MMO “is granted a licence in the terms set out in Annexure A to these Orders”. The words in the orders relating to each MMO “and the Tribunal so specifies under section 157(6B)(a) of the Copyright Act 1968 (Cth) as to the charges and conditions recited in Annexure A” reflect the fact that s 157(6B)(a) requires the Tribunal to specify the charges and conditions the Tribunal considers reasonable in the circumstances in relation to the applicant “in respect of the matters specified in the order”. The matter specified in the order remains the grant of a licence.
108 It follows that to the extent the parties to this appeal proceeded on the assumption that the MMOs have not been granted a licence as a result of the Tribunal’s orders because the Tribunal acted under s 157(6B)(a) and not s 157(6B)(b), they are mistaken. The licence is a licence granted by the Tribunal and not by CAL as the licensor. But it is, in terms and effect, a licence.
109 This conclusion is not affected by s 159(4) which provides as follows:
(4) Where the Tribunal has made an order on an application under subsection 157(1), (2) or (3) specifying charges, if any, and conditions, in relation to the applicant, in respect of the matters specified in the order, then if:
(a) the applicant has complied with the conditions specified in the order; and
(b) in a case where the order specifies any charges – he or she has paid those charges to the licensor or, if the amount payable could not be ascertained, has given to the licensor an undertaking in writing to pay the charges when ascertained;
the applicant shall be in the like position, in any proceedings for infringement of copyright relating to any of those matters, as if he or she had at all material times been the holder of a licence granted by the owner of the copyright concerned on the conditions, and subject to payment of the charges (if any), specified in the order.
110 Section 159(4) refers to “the matters specified in the order”. As discussed, the matters specified in the order can include the grant of a licence by the Tribunal either under s 157(6B)(b) (in terms proposed by a party) or s 157(6B)(a) (specifying charges, if any, and conditions, in relation to the applicant as determined by the Tribunal). The deeming provision (as if he or she had at all material times been the holder of a licence granted by the owner of the copyright concerned on the conditions, and subject to payment of the charges (if any), specified in the order) is necessary because any licence granted under s 157(6B)(a) or (b) is a licence granted by the Tribunal, and not by the licensor. The deeming provision operates so that such a licence is taken to be a licence granted by the owner of the copyright on the conditions, and subject to payment of the charges (if any), specified in the order. This ensures that there is no infringement under s 36(1), which depends on an act comprised in the copyright being done by “a person who, not being the owner of the copyright, and without the licence of the owner of the copyright” (emphasis added) does the act.
111 CAL submitted that as “licence” is defined in s 136(1) to mean “a licence granted by or on behalf of the owner or prospective owner of the copyright … to do an act comprised in the copyright” it must follow that the Tribunal’s power under s 157(6B) is confined by the extent of the authority, permission or power conferred on the licensor by the owners of copyright to grant licences of acts comprised in that copyright. According to CAL, the Tribunal accepted this at R1 [146], [159] and [165].
112 One overarching observation which should be made immediately is that it does not particularly matter what the Tribunal said in R1 in answer to the separate questions. It is possible to get mired in the detail of the Tribunal’s reasoning in R1 for little, if any, purpose. What matters is what the Tribunal did as a result of its reasons in R2. This is particularly important in the present case. The Tribunal’s reasons in R1, reflecting the separate questions and submissions put to it by the parties, are not readily relatable to the reasons and outcomes in R2. The parties agreed facts for the purposes of R1, presumably for the purpose of ensuring that the separate questions did not involve the Tribunal in the giving of a mere advisory opinion. That does not mean that the Tribunal was bound by those agreed facts when it came to R2, by which time the parties had the opportunity to put before the Tribunal all of the relevant evidence. There is no reference to the statement of agreed facts in R2. Further, when it came to it, the Tribunal’s approach in R2 about CAL’s “mandate” involved a process of reasoning different from that in R1 (in particular, at R2 [858]–[862]). CAL complains about this different reasoning, but its arguments in that regard are not assisted by reference to either R1 or the agreed facts for the purpose of R1 on which the Tribunal did not rely for R2. Nor could CAL prevent the Tribunal from examining the underlying documents for itself to determine the legal relationship between CAL and CopyCo and CAL and other publishers. Having undertaken the detailed consideration it did in R2, it is not the case that the Tribunal could not have concluded as it did but for the reasoning in R1.
113 The focus of CAL and the intervening parties on R1 merely exposes another example of why the determination of separate questions on a basis which appears sound and sensible to all involved at the time might ultimately lack utility. It also exposes that the MMOs’ contentions that the application is out of time or has been the subject of unreasonable delay cannot go very far, because R1 is of such marginal relevance to what ultimately occurred in R2. The MMOs cannot have it both ways – that is, they cannot both correctly marginalise the relevance of R1 yet complain that CAL is too late to complain about R2 to the extent it depended on R1. The reality is that R1 ultimately did not matter when the Tribunal came to determine R2.
114 In any event, it is clear from R1 (for example, at [127]–[132]) that the MMOs never accepted the concept of CAL having a “limited mandate” as it proposed as their argument was that: (a) they had each claimed that they required a licence from CAL, being “a licence granted by or on behalf of the owner or prospective owner of the copyright … to do an act comprised in the copyright” as provided for in the definition of “licence” in s 136(1), (b) CAL had proposed a licence (as defined) subject to the payment of charges, or to conditions, that were unreasonable as referred to in s 157(3)(b), and (c) having been satisfied that their claims were well-founded, the Tribunal was empowered under s 157(6B)(a) to make an order specifying “the charges, if any, and the conditions, that the Tribunal considers reasonable in the circumstances in relation to the applicant” and under s 157(6B)(b) to order that the applicant be granted a licence in the terms proposed by the applicant. That is, so far as the MMOs were concerned in R2, the agreed facts for R1 were immaterial to their case. As explained below, the position of the MMOs correctly reflects the statutory provisions.
115 It follows that we do not agree with the intervening parties that the MMOs “conceded” that CAL did not have the authority of the copyright owners to grant a licence to do the things proposed. In R1 at [165] the Tribunal recorded that the MMOs accepted in the agreed facts that CAL did not have the authority of the owners of the copyright to grant the MMOs the right to do certain acts. Those acts included the Excluded Works Term (relating to the withdrawal of publications from the scope of the licence during its term). As discussed, the agreed facts were prepared for the purposes of R1 to (try to) ensure that the Tribunal was not engaged in a hypothetical advisory function. Even in R1, the MMOs’ position was that CAL’s limited mandate proposition was misconceived in terms of the statutory scheme. By the time of R2, the parties had filed all evidence. There is no factual foundation which has been drawn to our attention suggesting that the parties’ cases in R2 proceeded on the basis of any concession by the MMOs for the purpose of R1. In any event, the MMOs’ construction of the statute is correct and the agreed facts are immaterial to that exercise.
116 Accordingly, nothing is to be gained by searching for inconsistencies between R1 and R2. The fact that the Tribunal’s thinking about issues developed and changed between R1 (published on 15 July 2020 on the basis of some agreed facts) and R2 (published on 15 October 2021 after a lengthy hearing, extensive evidence and without apparent reference to the agreed facts for the purposes of R1) is unsurprising. In these circumstances, the appropriate course is to construe the statute and then to examine each provision of the licences ordered by the Tribunal to which CAL objects and determine whether any provision might involve an excess of power or legal unreasonableness by the Tribunal.
117 The fact that the parties wrongly assume that the Tribunal’s orders of 25 October 2021, because they were made under s 157(6B)(a) and not s 157(6B)(b), do not involve the grant of a licence by the Tribunal informs the error in CAL’s approach to the construction of the statutory provisions. Once it is appreciated that it is the Tribunal, not CAL, granting the licence under s 157(6B)(a), it is not at all difficult to accept that the power of the Tribunal to do so subject to the charges and conditions that the Tribunal (not CAL) considers reasonable is not constrained by the charges and conditions which the owners/members of CAL required CAL itself to impose on any licence CAL grants.
118 It is important to understand that CAL’s “mandate” argument is premised on the fact that the agreements between CopyCo and it and owners/members of it include a provision to the effect that CAL must submit to CopyCo for approval terms of all pro-forma licences under which it proposes to license the rights, such approval not to be unreasonably withheld: see cl 5.1 of the CopyCo and CAL agreement. This is the anchor for CAL’s position that the only licence CAL was authorised to grant is a licence on terms approved by CopyCo (or publishers if not members of CopyCo). By this anchor, CAL sought before the Tribunal (and seeks before us) to argue that the only licence the Tribunal was authorised to grant is a licence in the form CAL had approval from CopyCo (and publishers if not members of CopyCo) to grant, being the various alternative CAL licences the Tribunal rejected as unreasonable.
119 This proposition barely needs articulating before it is apparent that the legal effect of CAL’s submissions is that a licensor and its owners/members can stymie the Tribunal from exercising power in terms of s 157(6B)(a) or (b) by the simple expedient of confining the so-called “mandate” of the licensor at any time during the hearing before the Tribunal or, indeed, after it publishes reasons and before it makes an order under s 157(6B)(a) or (b). This explains why Isentia is right when it says that:
…taking the “mandate” concept to its logical extreme, CA could subvert the Tribunal’s jurisdiction altogether by seeking an instruction from copyright owners that they license rights only on particular terms and conditions, such that any variation by the Tribunal (even adjusting the price by as little as $1) would exceed the “mandate”. That is not a workable approach; it is not how s 157(3) and (6B) and s 159(4) operate on a proper construction.
120 As explained further below, and contrary to the arguments of CAL and the intervening parties, the relevant distinction is between:
(1) the claim of an applicant under s 157(3) (that a licensor such as CAL has refused or failed to grant the licence, or to procure the grant of the licence that the person requires, or has proposed that such a licence should be granted subject to the payment of charges, or to conditions, that are unreasonable) that engages the Tribunal’s jurisdiction; and
(2) the Tribunal being satisfied that this claim is well-founded – in which event, under s 157(6B) the Tribunal may “make an order specifying, in respect of the matters specified in the order, the charges, if any, and the conditions, that the Tribunal considers reasonable in the circumstances in relation to the applicant” (s 157(6B)(a)) or “order that the applicant be granted a licence in the terms proposed by the applicant, the licensor concerned or another party to the application” (s 157(6B)(b)).
121 In this statutory scheme, the idea that the Tribunal cannot grant a licence on conditions different from those on which CAL is empowered by its owners/members to grant a licence is misconceived. Attempting to characterise those conditions on CAL’s power as affecting CAL’s “mandate” or “authority” or “power” to grant a licence is also misconceived. The only question that arises in respect of the Tribunal’s jurisdiction is the making of the relevant claim as described above. The question is – when can a person claim that a licensor has refused or failed to grant the licence, or to procure the grant of the licence the person requires, or has proposed that such a licence should be granted subject to the payment of charges, or to conditions, that are unreasonable?
122 As explained further below, while the extension of s 157(3) to a licensor’s failure to “procure” the grant of a licence at all or on reasonable conditions might be construed as encompassing any refusal or failure by a licensor to procure such a licence from any person, be it a member of the licensor or not, or be it in respect of a copyright work of a member the licensor may or may not license, that construction would be inconsistent with the text and context of the legislation.
123 The text and context of the legislation disclose that a licensor may refuse or fail to grant or may refuse to procure the grant of the required licence (at all or on reasonable conditions) if the licensor has the capacity to grant a licence for the act comprised in the copyright of the copyright work. If the licensor may do so, even if it may do so only on certain charges and conditions, the existence of that capacity is sufficient to engage the potential operation of s 157(3). A person may then make a claim within the scope of s 157(3). The charges and conditions on which the licensor is authorised by its owners/members to grant the licence do not affect the capacity of the person to claim that the charges and conditions are unreasonable and do not affect the capacity of the Tribunal to impose different charges and conditions.
124 The fallacy in the arguments of CAL and the intervening parties are readily exposed. Assume an owner/member of CAL authorises CAL to grant a licence over all acts comprised in the copyright in a copyright work but in the authorisation prescribes that CAL may not grant such a licence for less than a specified charge per year. If CAL and the intervening parties are right, that specified charge confines CAL’s “mandate” or “power” or “authority” to grant a licence. On their argument, the Tribunal could not grant a licence on the basis of any lesser charge. That cannot be right.
125 What this exposes is the difference between a licensor’s capacity to grant any licence at all for an act comprised in the copyright of a copyright work (irrespective of the charges and conditions which the owner/member imposes on CAL and which binds CAL) and the licensor not having any capacity to grant any licence at all for an act comprised in the copyright of a copyright work. In the former case, a claim within s 157(3) may be made and the Tribunal has power under s 157(6B) unconstrained by the conditions on CAL’s power. In the latter case, a claim within s 157(3) may not be made.
126 This construction of ss 157(3) and (6B) reflects the text and context of the statutory scheme. It is also consistent with other authority concerning ss 157(1) and (2). The basic proposition is this – a member/owner of a licensor cannot take the benefit of the potential for collective licensing by enabling a licensor to grant a licence of an act comprised in the copyright of a copyright work and avoid the operation of ss 157(3) and (6B) by confining the “mandate” of the licensor to grant the licence only on certain charges and conditions. These limitations on the “mandate” of the licensor to grant the licence will bind the licensor but cannot bind the Tribunal. Having chosen to enable a licensor to grant a licence of an act comprised in the copyright to a copyright work and to take the potential benefit of collective licensing, the owner/member cannot escape the power of the Tribunal to decide on a licence being granted subject to charges and conditions different from those the owner/member imposed on the licensor.
127 To explain further, the definition of “licence” in s 136(1) is “a licence granted by or on behalf of the owner or prospective owner of the copyright in a work”. The “owner” is not defined for the purposes of Pt VI of the Copyright Act which concerns the Tribunal and its powers (it is defined in s 134B, but only for the purposes of Div 7 of Pt V). The “licensor” as defined in s 136(1) is not the “owner” of the copyright. The definition of “licensor” contemplates that an owner of the copyright will be entitled to be a member of the “licensor”. That does not make the “licensor” the owner of the copyright.
128 It may be accepted that under s 157(3), the pre-conditions to the making of an application by a person claiming they require a licence in a case where a licence scheme does not apply involve the conduct only of the “licensor” (as defined in s 136(1)) and not the owner of the copyright works.
129 Section 157(7) is also relevant as it provides that:
A reference in this section to a failure to grant a licence, or to procure the grant of a licence, shall be read as a reference to a failure to grant the licence, or to procure the grant of the licence, as the case may be, within a reasonable time after a request to do so.
130 As noted, the concept of the licensor refusing or failing to grant or procure the grant of a licence including a licence on conditions that are claimed by the person requiring the licence to be unreasonable involves a capacity of the licensor to grant or procure the grant of such a licence. Given the definition of “licensor” (which includes that this body must have a constitution which “entitles any owner of copyright, or any owner of copyright of a specified kind, to become a member of the body” (s 136(b)(i)), “provides that the main business of the body is granting licences” (s 136(b)(iii)), and “requires the body to distribute to its members the proceeds (after deduction of the body’s administrative expenses) from payments to the body for licences” (s 136(b)(iv))), it is apparent that the relevant capacity of the licensor is the capacity to grant a licence in respect of an act comprised in the copyright of one of its members.
131 On this basis, the concept of the licensor refusing or failing to grant or procure the grant of the required licence would not extend to a licence where the licensor is in no different position from any other person. That is, the concept would not extend to the licensor refusing or failing to grant or procure the grant of a licence in respect of an act comprised in the copyright of a copyright work of a member where the licensor had not been granted any authority by the member to grant a licence for that act over that copyright work or in respect of any copyright work of a non-member. The licensor could not refuse or fail to grant or procure the grant of any such licence. But it can refuse or fail to grant or procure the grant of a licence (including on charges and conditions the person accepts to be reasonable) from one of its owners/members where the licensor is able to grant some kind of licence for the relevant act in respect of the relevant work. Once that is the position, a person can make a claim under s 157(3) and all of the Tribunal’s powers in s 157(6B) are engaged. The limits, if any, on the licensor’s power as imposed by the owner/member are mere charges and conditions within the power of the Tribunal to determine for itself.
132 If it were otherwise and the approach of CAL and the intervening parties were to be accepted then:
(1) the concept of the refusal or failure to grant or to procure the grant of a licence by a licensor would be otiose;
(2) the concept of the refusal or failure to grant or to procure the grant of a licence subject to conditions that are unreasonable would be otiose;
(3) the concept of the Tribunal being able to make an order in respect of the matters specified in the order the charges and conditions that the Tribunal considers reasonable in the circumstances in relation to the applicant would be otiose;
(4) the concept of the Tribunal ordering that the applicant be granted a licence in the terms proposed by the applicant or a party to the application other than the licensor would be otiose; and
(5) a licensor and/or the owners/members of the licensor, at any time, could set the power of the Tribunal at naught by the simple expedient of imposing conditions on the licensor’s power to license in the same terms as the licence provisions which the licensor and/or the owners/members of the licensor wish.
133 CAL and the intervening parties relied on the reasoning in PPCA to support their arguments. PPCA supports the construction we propose. PPCA concerned the operation of a licence scheme. A “licence scheme” is defined in s 136(1) to mean a scheme:
formulated by a licensor or licensors and setting out the classes of cases in which the licensor or each of the licensors is willing, or the persons on whose behalf the licensor or each of the licensors acts are willing, to grant licences and the charges (if any) subject to payment of which, and the conditions subject to which, licences would be granted in those classes of cases.
134 Section 137 regulates the cases to which a licence scheme applies. By s 154(1), where a licensor proposes to bring a licence scheme into operation, he or she may refer the scheme to the Tribunal. By s 154(4), the Tribunal may “make such order, confirming or varying the scheme or substituting for the scheme another scheme proposed by one of the parties, as the Tribunal considers reasonable in the circumstances”. By s 154(7), the scheme reflecting the Tribunal’s order comes into operation when the order is made and operates as long as the order remains in force.
135 In this statutory context, the Full Court in PPCA concluded that a “licence scheme” must be one that involves the classes of case that the licensor (collecting society) or person on whose behalf the licensor acts (broadly, the owner of copyright) is willing to grant: [141]. The Tribunal’s power extends to determination of the charges and conditions to be imposed in respect of those “classes of case” (that is, the acts comprised in the copyright able to be exercised under the licence scheme), but does not extend to other classes of case (that is, other acts in the copyright or other copyright works) that the licensor and/or owners are not willing to grant: [142]. The Full Court considered this to be consistent with the fact that what is being regulated is the relationship between the licensor and the would-be licensee, not the owner of the copyright and the would-be licensee. The Full Court said (emphasis added):
[143] In our view this approach is consistent with the policy and purpose of Part VI of the Act, which is to confer on the Tribunal power to supervise the relationship between collecting societies and persons in need of licences. The starting point mandated by s 154(1) is the voluntary offer of a licence scheme by the licensor on behalf of its members. It is not a scheme for the compulsory license of rights, which are addressed in other provisions of the Act. Indeed, the absence of the prescriptive provisions applicable to compulsory licensing provides a further indication that this is the correct approach.
[144] PPCA contends that it was not “willing” to grant licences in respect of the non-PPCA rights and also that its input agreement with the copyright owners whom it represents had not granted it a licence in respect of those rights. As a result, it submits that those owners were also not willing to grant licences for those classes of cases and, furthermore, PPCA was not able to do so. To some extent the reference to the input agreements distracts from the real point, which turns on the “willingness” or otherwise of the parties mentioned to grant the licence in respect of the classes of cases identified. That is to be ascertained from the form of licence scheme proposed by the licensor, which represents the interests of the copyright owners and accordingly may be taken to reflect the “willingness” of both.
[145] The consequence of our construction is that the Tribunal does not have power to vary the scheme proposed by a licensor insofar as it affects the classes of cases in respect of which the licence is proposed to be granted. In our view this does not lead to an absurd or unworkable result (as Foxtel contends). Subdivision H (ss 154–159) of Division 3 of Part VI of the Act concerns the regulated approval of licence schemes volunteered by rights owners. These licence schemes are to be contrasted with the grant of statutory licences under the Act, where statutory mechanisms provide for the compulsory licence of certain acts within the copyright of an owner, subject to certain provisos. An example of the latter is s 108 of the Act, which provides a defence to copyright infringement in a sound recording performed in public on terms requiring, inter alia, the payment to the copyright owner of equitable remuneration the amount of which is to be determined by the Tribunal if the parties are unable to agree. Under s 154 of the Act a degree of decisional freedom is given to the Tribunal to impose reasonable charges and conditions on the licensor, but not to expand the cases in respect of which the copyright licence is to be granted. To do so would permit the Tribunal to impose a compulsory licence upon the rights owners in circumstances where the Act indicates that this is not its intention.
136 Sections 157(1) and (2) are confined to claims by a person in a case to which a licence scheme applies. In this context, the reference in s 157(1) to a “person who claims, in a case to which a licence scheme applies, that the licensor operating the scheme has refused or failed to grant him or her a licence in accordance with the scheme, or to procure the grant to him or her of such a licence” necessarily confines the potential claim, relevantly, to a refusal or failure of the licensor to procure the grant of “such a licence”, being a licence in a case to which a licence scheme applies.
137 By analogy to the reasoning in PPCA, given that s 157(3) applies to a person who claims that he or she requires a licence in a case to which a licence scheme does not apply, the decisional freedom of the Tribunal does not extend to copyright works or acts comprised in the copyright which the licensor is not authorised to licence at all. But it does extend to acts comprised in the copyright of copyright works in respect of which the licensor may grant a licence, irrespective of the charges and conditions which bind the licensor’s capacity to grant the licence. On this basis, the reasoning in PPCA supports our approach to ss 157(3) and (6B) and is inconsistent with the approach of CAL and the intervening parties.
138 The intervening parties submitted this:
The power in s 157(6B) is enlivened by an application made under s 157(2) or s 157(3). Section 157(2) is, in terms, limited to cases where there is a licence scheme in place. There can be little doubt that the Full Court’s reasoning in PPCA, insofar as it rested on the voluntary nature of a licence scheme, applies with equal force to a power exercisable following an application under s 157(2). It would be anomalous if the power under s 157(6B), although expressed to be available following an application ‘under subsection (2) or (3)’, was to operate in a markedly different way depending on which of those paths to jurisdiction was enlivened.
139 As discussed, s 157(6B) is engaged by an application under ss 157(2) or (3). As explained, an application under s 157(2) is tied to “a case to which a licence scheme applies” which calls into play the provisions peculiar to licence schemes (with their focus on “the classes of cases in which the licensor or each of the licensors is willing, or the persons on whose behalf the licensor or each of the licensors acts are willing, to grant licences” per s 136) as examined in PPCA. Section 157(3) applies to a case in which a licence scheme does not apply. The decisional freedom of an owner/member where a licence scheme does not apply is whether or not to permit a licensor to grant a licence (that is, any form of licence at all) over an act of copyright in a copyright work. If the owner/member chooses to permit a licensor to grant any licence for doing an act comprised in the copyright of a work, every limitation on that right is a mere condition the Tribunal is entitled to evaluate for reasonableness. The distinction between Pt VI and mandatory licences such as in s 108, considered in PPCA, does not lead to a different conclusion.
140 These conclusions are also consistent with the explanatory material relevant to the 2006 amendments to the Copyright Act. As noted, the recommendation of the Copyright Law Review Committee report at [11.67] was that “the jurisdiction of the Tribunal over non-statutory licences be confined exclusively to the review of licences administered by a collecting society, and that the Act be amended accordingly”. It could not be said that by the words “licences administered by a collecting society”, the Committee had in mind that an owner/member of a licensor might seek to both gain the advantage of a collective licensing scheme by enabling the licensor to grant a licence in respect of a copyright work, then purport to prevent the Tribunal from deciding if the conditions of any such licence the licensor could grant are or are not unreasonable by confining the licensor to grant a licence only on certain terms. Whatever else might be the case, the intention of the 2006 amendments was not to enable an owner of copyright to game its relationship with a licensor to enable it to better exert the market power it might have in a particular copyright work.
141 For these reasons, the submission of the intervening parties that nothing suggests that “s 157(6B) was intended to confer on the Tribunal a jurisdiction to make orders regulating the rights of copyright holders, as distinct from licensors” is misplaced. The Tribunal does not have jurisdiction over any copyright owner. But if an owner/member has chosen to grant a licensor a right to licence an act comprised in the copyright for a work, the owner/member has subjected itself to the Tribunal’s jurisdiction to decide the reasonableness of all charges and conditions to which the grant of a licence to do an act comprised in the copyright for that work might be subject.
142 The intervening parties also submitted that the construction we consider to be correct would be in tension with the notion, inherent in the concept of a licensor, that the licensor is “authorised” to deal with the works. The problem is with the approach of CAL and the intervening parties to the concept of “authorised”. The statutory provisions do not say that the Tribunal may grant a licence only on the conditions on which the licensor may grant a licence. To the contrary, the Tribunal is empowered to decide if the person’s claim that the conditions proposed by the licensor are unreasonable (that is, if the claim is well-founded) and, if so, to decide the conditions that are reasonable or decide to grant a licence as the applicant or some other party (not the licensor) proposes. In the face of these powers, the idea that the Tribunal can only impose conditions the same as the conditions an owner/member requires the licensor to impose is untenable and would undermine the entire purpose of ss 157(3) and (6B).
143 We agree with the intervening parties that it is not the intention of the statutory scheme to permit the Tribunal to regulate rights in which collecting societies are not “authorised” to deal. But the issue again is the concept of “authorisation” of the licensor. The expansive view of the “authority” of the licensor taken by CAL and the intervening authorities, if adopted, would consume the entirety of the statutory provisions.
144 We agree with the intervening parties that it is highly unlikely that Parliament would have intended to confer a power to regulate the rights of copyright holders at large by means of ss 157(3) and (6B). On our construction, the provisions do not have that effect. The point we are making is that if an owner/member chooses to participate in collective licensing by permitting a licensor to grant a licence of a copyright work, it cannot then prevent the Tribunal from deciding the reasonableness of all charges and conditions of the grant.
145 Contrary to the submission of the intervening parties, the principle of legality is not infringed, but supported, by our referred construction. The principle is that clear language must be used in legislation if a person is to be deprived of a valuable right: Tabcorp Holdings Limited v Victoria [2016] HCA 4; (2016) 328 ALR 375 at [68]. In the present case there is clear language in ss 157(3) and (6B) to which effect must be given.
7.2 Withdrawal of licensed works during licence term
146 Clause 1.1 of Annexure A (the Press Monitoring and Online Monitoring Licence) to the 25 October 2021 orders provides that:
Copyright Agency grants to [the MMO] a non-exclusive licence to do the following acts, whether by its employees, agents or otherwise, in the Territory in respect of Licensed Works for the Term:
(a) Copy Licensed Works;
(b) Communicate Licensed Works to Customers;
(c) make Scraped Copies of Licensed Works; and
(d) Communicate Portions of Scraped Copies of Licensed Works to Customers,
for the purpose of providing Press Monitoring Services or Online Monitoring Services to Customers.
147 Clause 11.1 includes the following definition:
Licensed Work means each article published in an Edition and any other work which Copyright Agency has been authorised to license to [the MMO] as at the Commencement Date, including each article in the publications set out in Annexure D;
148 Clause 2.8 is as follows:
Copyright Agency, including in its capacity as licensor acting on behalf of its publisher principals, may not, during the Term, withdraw any title comprising the Licensed Works as at 15 October 2021 (including any title identified in Annexure D to this Agreement) without the prior written consent of [the MMO].
149 According to CAL, however:
the rights granted by publishers to CopyCo are granted on the basis that they can withdraw publications from CopyCo from time to time, and in turn, the Agency Agreement provides that publications may be withdrawn from CA’s mandate. These rights of withdrawal have been exercised in practice: R1 at [40]; Statement of Agreed Facts at [22(d)].
150 The important point in respect of this issue is that neither CAL nor the intervening parties suggest that CAL was not authorised to grant a licence of some kind over the Licensed Works. That is, they accept that the owners/members of CAL had authorised CAL to grant a licence in respect of the relevant acts of copyright in the relevant copyright works. Their point is only that CAL’s “mandate” was limited in that CAL’s owners/members could withdraw a work from CAL’s mandate at any time. As explained above, in the context of ss 157(3) and (6B), those limitations on CAL’s power do not bind the Tribunal. They bind only CAL. As a result, this argument cannot succeed. All that follows below about this issue deals with the details of the submissions of the parties, but is unnecessary given the proper construction of the statute.
151 CAL’s position as set out in [22] of the agreed facts is ambiguously unhelpful. It refers to “rights or terms of which either CopyCo does not authorise CAL to grant licences to MMOs or CopyCo does not have authority to sublicense to MMOs”. Agreements between News Limited and CopyCo and John Fairfax Holdings Limited and CopyCo were in evidence (the agreements being in the same terms). Under cl 2.1, the publisher grants CopyCo a right to sub-license the “Rights” (being the right to reproduce or photocopy a literary or artistic work published in a Publication). By cl 2.4, CopyCo may appoint an agent. It is common ground that CopyCo appointed CAL under cl 2.4. By cl 6(b), the publisher must advise CopyCo of any changes to the Publications. The agreement from CopyCo to CAL is in terms to the same effect. By cl 2.1, CopyCo appoints CAL as its agent to sub-license the Rights. By cl 7, CopyCo must advise CAL of any change to the titles published by each publisher. The agreement also contains a provision in cl 5.1 (discussed above) to the effect that CopyCo (and the publishers) must approve the licences that CAL may grant.
152 As the respondents submitted, cl 6(b) of the publisher’s agreement with CopyCo would not be construed as permitting the publisher to do anything more than prospectively notifying CopyCo that certain publications were withdrawn from the scope of CopyCo’s rights to sub-license on and from the date of notification. Clause 6(b) would not be construed as prohibiting CopyCo from granting any sub-licence other than on a term or condition that the subject matter of the sub-licence, in whole or in part, might be withdrawn at any time. The construction CAL assumes is correct (that the publisher may withdraw a work at any time during the term of a sub-licence) would be wholly uncommercial. It would be impossible to price and structure any business on the basis of a licence for, say, 100 works if at any time during the course of the licence, all 100 works could be withdrawn at the whim of the publisher (and, not because, for example, the publisher had ceased to publish that work). Such a construction, giving retrospective rather than prospective effect to the publisher’s capacity to change a publication, does not reflect a reasonable business-like approach to the terms of the agreement. The reasonable business-like interpretation of cl 6(b) is to recognise that CopyCo is authorised to grant sub-licences of the publications from time to time. The publisher may notify CopyCo of a change to those publications at any time. Any such notification will have prospective effect only on future sub-licences. The same conclusion must apply to cl 7 of the agency agreement between CopyCo and CAL.
153 In terms of cl 2.8 of the Press Monitoring and Online Monitoring Licence, there is no suggestion that CAL’s rights from CopyCo (or from any other publisher directly) did not include the defined Licensed Works. To the contrary, the very definition of the Licensed Works is those works that CAL “has been authorised to license to [the MMO] as at the Commencement Date”. The proposition that CAL’s “mandate” was confined in the manner CAL (and the intervening parties) submitted is not established on the evidence of the actual legal relationships between CAL and CopyCo and CAL and the publishers. To the extent CAL relied on the various CAL licences which CopyCo and publishers had authorised it to put before the Tribunal, as explained, we do not accept that the statutory scheme contemplates that a licensor and its owners/members may curtail the Tribunal’s power by the expedient of the owners/members only approving the licensor to grant a licence on particular charges and conditions.
154 Nor is it significant that the Tribunal’s orders grant a licence in respect of copyright works that have not yet come into existence. The purpose of the licence is to enable the MMOs to provide Press Monitoring Services and Online Monitoring Services to Customers. These are defined in cl 11.1 of the Press Monitoring and Online Monitoring Licence as the service by which the MMO makes available copies or portions of works and other data from publications in print or digital format, the relevant publications being the articles published in an Edition which CAL “has been authorised to license to” the MMO as referred to in the definition of Licensed Work. Accordingly, the licence operates prospectively in respect of those works which CAL was authorised to licence as at the date of the licence (15 October 2021 under order 2 of the orders of 25 October 2021).
155 It is apparent that the Tribunal considered the terms of the agreements between CAL and its members before the creation of the various CAL licences for the purpose of the hearing before the Tribunal: R2 [21]–[27]. As discussed, those pre-existing agreements do not support the submissions of CAL and the intervening parties about the limits on the scope of CAL’s powers as licensor. At worst, this means that the Tribunal’s analysis of the relationship between CAL and its members (including CopyCo) as involving CAL acting as agent for each publisher as a disclosed principal at R2 [858]–[860] was unnecessary. Leaving aside the expedient of the creation of the various CAL licences for the purpose of the hearing before the Tribunal (thereby purportedly confining CAL’s authority to grant any licence to a licensee only on the precise terms of the licences approved by CAL’s owners/members), the order the Tribunal made giving effect to cl 2.8 of the Press Monitoring and Online Monitoring Licence was within power even if CAL and the intervening parties are right that the Tribunal’s power to order that “the applicant be granted a licence in the terms proposed by the applicant” could not extend beyond the power of the licensor to grant such a licence.
156 It is also necessary to deal with the argument of CAL and the intervening parties that cl 2.8 is legally unreasonable.
157 To the extent this argument depends on cl 2.8 being beyond the power of the Tribunal to impose, it cannot succeed for the reasons already given.
158 To the extent this argument depends on the Tribunal’s power to impose conditions, whatever the Tribunal’s reasoning in R1 about what a “condition” means, the Tribunal’s reasoning in R2 does not offend the statement in PPCA at [132] that:
A “case” concerns the licence of the whole or a part of the copyright. A condition will be any term that does not concern the scope of the rights granted. Instances include terms going to the provision of warranties, the mechanics of the payment regime, dispute resolution terms, and choice of law terms.
159 What is relevant for present purposes is that cl 2.8 does not extend beyond the rights (that is, the acts comprised in the copyright relating to the works the subject of the licence) that CAL had power to grant. The Tribunal was right to reach this view, irrespective of its method of reasoning.
160 The Tribunal’s further observations at R2 [860] and [861] that the scope of the Licensed Works falling within the grant of the licence is fundamental and that CAL and publishers ought not to be able to withdraw Licensed Works during the terms of the licence do not expose error or legal unreasonableness.
161 The issue is the withdrawal of a Licensed Work during the term of an already granted licence (and not, for example, the cessation of the publication of a Licensed Work). All that is being said is that it is not reasonable for CAL or an owner/member to be able to withdraw any Licensed Work from the licence during its term without the MMO’s consent because those works are central to the purpose of the licence. This conclusion was reasonably open to the Tribunal. The fact that this limits the freedom of choice of CAL and the owner/member for the term of the licence does not expose that (as contended by the intervening parties) “what was being regulated by the Tribunal’s order was the publishers’ rights independent of those conferred on the licensor, contrary to the scheme of Part VI” or mean that this exercise of power by the Tribunal was unreasonable. The former proposition has been rejected above. The latter proposition assumes the correctness of the former.
162 It is also not the case that the Tribunal did not consider the “significant intrusions” of the conditions on the rights of the relevant owners/members. The balance to be struck between the interests of those represented by CAL (the owners/members) and the MMOs was, as the Tribunal put it at R2 [858], the subject of careful consideration by the Tribunal. The Tribunal was cognisant of the fact that an owner/member may wish to withdraw a title during the term of a licence. The Tribunal’s evaluation was that providing for such a right was unreasonable for an existing licence given that the “fee and other terms of the licence represent a total commercial bargain the value of which, at the moment in time when it is struck, rests on the scope of the rights granted and the way in which those rights might be exercised once granted”: R2 [859].
7.3 Ongoing right of communication
163 This issue concerns cl 2.11 of the Press Monitoring and Online Monitoring Licence. Clause 2.11 provides that:
For the avoidance of doubt, in respect of a work that has been Copied, Scraped or Communicated to particular Customers, [the MMO] may continue to retain and Communicate the particular work to those particular Customers for 12 months [REDACTED], including for the purpose of providing Customers with access to Copies of Licensed Works and any Portions of Scraped Copies of Licensed Works in accordance with any Downstream Licence. At the expiry of this 12 month period, [the MMO] must remove all copies of the work from its Secure Portal, archives, networks or other electronic storage systems.
164 CAL’s submission is that this is beyond power as CAL’s “mandate” from its owners/members is limited to allowing the communication of a work for 12 months after it is first obtained. This argument again fails on the proper construction of the statutory provisions.
165 Otherwise, the sole foundation for CAL’s proposition that its authority from CopyCo and owner/members was confined in this way is CAL’s proposed licences put before the Tribunal. This exposes the self-serving and, indeed, self-consuming nature of the case of CAL and the intervening parties in respect of the “mandate” or “authority” of the licensor to grant a licence only on certain terms preventing the Tribunal from examining the reasonableness of those terms as the conditions of the proposed grant of the licence.
166 In any event, the issue is that CAL asserts it is authorised to sub-license rights for 12 months from the first act of copying or scraping. As the MMOs submitted, given that at R2 [826] the Tribunal concluded that the copying and scraping of content “is an act of making the content available online in the definitional sense of the first limb of the term “communicate” for the purposes of the Act”, it cannot be the case that the initial “Communication” to a customer within the meaning of cl 2.11 may occur after the act of copying and scraping. It is the acts of copying and scraping that make the work available to the customer whether or not the customer views any part of the work. Contrary to CAL’s submissions, this is how cl 2.11 operates and the same reasoning would apply to any act of copying and scraping by either MMO.
167 The fact that CAL sees fit to raise this kind of minutiae as part of its alleged “mandate” also discloses why matters of this kind cannot be characterised as anything more than mere conditions of the licensor’s proposed grant of a licence, amenable to the Tribunal’s power of evaluation of their reasonableness or unreasonableness.
168 CAL contends that cll 2.2 and 2.5 of the Press Monitoring and Online Monitoring Licence impose obligations on it with respect to paywall access and PDF supply of articles that exceed its “mandate” and the terms on which it was willing and able to license. Again, the source of this asserted limitation on CAL’s power is merely CAL’s own proposed licences put before the Tribunal.
169 Clause 2.2 requires CAL to:
use its best endeavours to ensure that its publisher members, and publisher members of CopyCo, make PDF or other digital files of Licenced Works published in print Editions available to Meltwater at a reasonable price and at the time those files are produced in final form, where possible prior to the news items in each of those files becoming available to the publishers’ readers but no later than when they are made available to readers.
170 Clause 2.5 requires CAL to:
use its best endeavours to ensure that, when a Customer receives, by way of Communication from [the MMO], a Portion of a Scraped Copy of a Licensed Work accompanied by a link to the Licensed Work on the relevant publisher’s Website, and the Licensed Work is behind a paywall, the Customer will be able to view that Licensed Work through the link without paying the publisher to do so even if the Customer has not separately subscribed to or registered for access to that publisher’s Website.
171 CAL’s real complaint seems to be that cll 2.3 and 2.7 provide for a fee reduction if CAL cannot secure these rights. CAL would have it that, as these matters are within the sole control of its owners/members, it cannot be reasonable for it to be subject to price reductions for not being able to secure those rights.
172 CAL’s concerns are unrealistic and uncommercial. CAL is an intermediary between the MMOs and the owners/members. The fees payable to CAL are to be distributed to its members after deduction of its administrative expenses (see the statutory definition of “licensor”). It makes commercial sense for the fees payable to CAL (for distribution to CAL’s members) to reflect the value of the full suite of rights that the MMOs obtain under the licences. If CAL cannot procure the full suite of rights including those in cll 2.2 and 2.5, it is neither unfair nor uncommercial, let alone legally unreasonable, for the fees payable to be reduced.
173 Otherwise, to the extent that CAL’s complaint is that cll 2.2 and 2.5 require it, and not the MMOs, to do something, with the consequence that these provisions are not “conditions” at all (CAL’s position being that a “condition” in the statutory scheme means a requirement binding only the licensee and not the licensor), we disagree for the reasons given below in respect of cll 9.1 and 9.2.
174 The Press Monitoring and Online Monitoring Licence includes the following provisions:
9.1 Copyright Agency warrants that it is authorised to license the Licensed Works in the manner provided for in this Agreement.
9.2 Copyright Agency indemnifies [the MMO] against any and all liability, damage, loss, costs and expenses (including legal costs and expenses) arising out of or as a consequence of:
(a) any breach by Copyright Agency of the warranty in clause 9.1; and
(b) any claim by a third party against [the MMO] that its use of the Licenced Works in accordance with this Agreement (or the use by a Customer in accordance with a Downstream Licence) infringes [REDACTED].
175 CAL contends that it has no control over these matters and which exceed its “mandate”. Yet again, the source of this purported limitation on the power of CAL is nothing more than its own proposed licences put before the Tribunal.
176 Contrary to CAL’s submissions, cl 2.8 is of no significance in this regard. By cl 2.8, CAL may not withdraw a Licensed Work during the Term. As discussed, cl 2.8 does not mean that CAL must continue to license a Licensed Work which an owner/member has withdrawn from CAL before commencement of the licence. The licence which the Tribunal has granted under s 157(6B)(a) is not a licence granted by CAL on the terms that CAL was authorised by owners/members to grant. It is a licence granted by the Tribunal binding CAL and the MMOs on conditions which the Tribunal was empowered to impose. The fact that CAL misunderstands the effect of cl 2.8 and disagrees with it does not mean that cll 9.1 and 9.2 are beyond the power of the Tribunal.
177 CAL’s next argument about cll 9.1 and 9.2 is that they are not a “condition” within the meaning of s 157(6B) because, when that provision is read with s 159(4), it is obvious that a condition is a stipulation to be complied with by a licensee and not a stipulation to be complied with by a licensor.
178 We see no justification for CAL’s confined construction of the concept of a “condition” in s 157(6B). It is true that s 159(4) provides that a person who has complied with conditions and paid the charges as specified in the Tribunal’s order will be taken to:
be in the like position, in any proceedings for infringement of copyright relating to any of those matters, as if he or she had at all material times been the holder of a licence granted by the owner of the copyright concerned on the conditions, and subject to payment of the charges (if any), specified in the order.
179 The conditions relevant for the purpose of s 159(4) must be the conditions with which the person (the applicant) is to comply. This does not mean that when it comes to the determination of what, if any, conditions are reasonable “in the circumstances in relation to the applicant”, the Tribunal cannot specify the imposition of any obligation of any kind on CAL.
180 The Press Monitoring and Online Monitoring Licence imposes numerous obligations on CAL. If CAL is right, then none of these provisions are within power as “conditions”. For example, consider the following clauses:
4.2 Copyright Agency will invoice [the MMO] for the Licence Fee for each Quarter…
4.4 If [the MMO] fails to pay the Licence Fee by the due date:
…
(b) Copyright Agency will provide a properly rendered tax invoice for interest on the unpaid amount;
(c) Copyright Agency may by notice in writing request Meltwater to show cause within 30 days why the licence should not be suspended; and
(d) if Copyright Agency is not satisfied that Meltwater had reasonable cause for the delay in payment of the Licence Fee, then, subject to compliance with the dispute process in clause 8, Copyright Agency may suspend the licence granted under this Agreement until such payment is received. Copyright Agency will not unreasonably exercise its discretion under this clause.
4.5 Copyright Agency will not offer a new licence, or amend an existing licence, providing equivalent rights on these or similar terms to any other organisation providing similar services for a more favourable licence fee unless Copyright Agency has first offered to Meltwater a licence fee at that lower rate.
…
6.1 Subject to clauses 6.2 to 6.4, a party must not during or after the Term of this Agreement, except in the proper course of the performance of its obligations under this Agreement, disclose any Confidential Information of the other party without the previous consent in writing of the other party.
…
8.1 Subject to clauses 2.3, 2.6, 2.9, and 4.4, the parties shall attempt in good faith to resolve any dispute, controversy or claim arising out of, relating to or in connection with this Agreement (including any question regarding its existence, validity or termination) (Dispute) promptly by negotiation.
181 Why are these not the kinds of conditions that the Tribunal might impose as it “considers reasonable in the circumstances in relation to the applicant”?
182 There is no justification in the text or context of the statutory provisions to construe “conditions, that the Tribunal considers reasonable in the circumstances in relation to the applicant” to mean stipulations which bind only the applicant and not the licensor. The words “in relation to the applicant” must mean in relation to the applicant as the person making a claim within the meaning of s 157(3). That claim is made of and in respect of the actions of the licensor. The obligations which it might be reasonable for the Tribunal to impose on the licensor are conditions in relation to the applicant as the claimant under s 157(3).
183 CAL’s real complaint, in our view, is simply that it was legally unreasonable of the Tribunal to impose cll 9.1 and 9.2 on CAL. The fact that CAL and its members/owners do not like the Tribunal’s determination of what conditions are reasonable should not be permitted to obscure the fact that we are dealing with an application for judicial review and that judicial review for legal unreasonableness is extremely confined. The mere fact (if it be the fact) that we might disagree (even emphatically) with the imposition of these conditions is immaterial. The issue is whether it was reasonably open to the Tribunal to impose these conditions.
184 As to the warranty, all that is required is for CAL to correctly identify the Licensed Works at the commencement of the licence. There is no suggestion CAL has not done so. CAL’s concerns about the Licensed Works changing over the term of the licence, as explained, are unfounded. On this basis, we cannot accept that the warranty condition in cl 9.1 is legally unreasonable.
185 As to the indemnity in cl 9.2, the critical fact is that CAL never put any argument to the Tribunal that this provision should not be imposed on the ground of unreasonableness (be it legal unreasonableness or otherwise). In not doing so but seeking to challenge the provision in this application, CAL effectively denied the Tribunal the capacity to evaluate the arguments CAL now makes. In these circumstances, where CAL had the opportunity below to make arguments about the merits of all provisions of the proposed licences, it is difficult to accept the proposition that cl 9.2 lacks any logical justification or is so unreasonable that the Tribunal could not have imposed it. Indemnities are common features of copyright licences. Indeed, it might be said that the very purpose of the licence is to provide the licensee with protection from third party claims for copyright infringement. Further, it should not be overlooked that in this case the owners/members of CAL are third parties to the licence ordered by the Tribunal. It is undoubtedly reasonable for an MMO to be protected by CAL from any such claim for a use within the scope of the licence.
186 We recognise that the indemnity in cl 9.2 is not confined to a claim against an MMO by a third party who is an owner of a copyright work the subject of the licence. The indemnity extends to any claim by any person that the MMO’s use infringes [REDACTED]. CAL could have made arguments to the Tribunal that the scope of the indemnity was too wide. Those arguments might have been accepted by the Tribunal. But in circumstances where that argument was not made and the network of conditions the Tribunal imposed (including as to charges) would be inferred to be interrelated, we are not prepared to undertake, in effect, what would be a merits review under the guise of a legal unreasonableness challenge. The condition has a logical justification and is not so unreasonable that no Tribunal could have imposed it. That suffices to reject this challenge.
187 According to CAL, the definition of “Territory” in cll 1.1, 11.1 and Annexure E of each licence exceeds the geographical “mandate” enjoyed by CAL with respect to certain works. The source of this limitation on CAL’s power is not apparent.
188 Consistently with the reasoning above, the geographical extent of a licence is a condition. It was for the Tribunal to evaluate the reasonableness of the geographical extent of the licences to the MMOs. There is no circumstance which suggests that the Territory as defined in Annexure E to each licence (in effect, [REDACTED]) is unreasonable in any way.
8. THE EXTENSION OF TIME ISSUE
189 We may deal with this issue briefly. As indicated, we do not accept the MMOs’ submissions. The relevant orders of the Tribunal were made on 25 October 2021 as a result of R2. The application was made within time under s 11(3) of the ADJR Act in respect of those orders. The orders in respect of R1 made on 15 July 2020 were answers to separate questions. The problem with the formulation of those separate questions is that it is not apparent how the answers would affect the outcome in R2.
190 The Tribunal said many things in R1 including about the proper construction of the Copyright Act. Our problem is that it is not apparent how those things were relevant to what the Tribunal decided in R2. In our view, while the things said in R1 might have informed the Tribunal’s general understanding of the statutory scheme for the purpose of R2, nothing said in R1 determined anything in R2. The MMOs seem to embrace this reality in their approach to the agreed facts in R1. As discussed, we consider the MMOs to be right in this regard, but the practical consequence is that R1 is simply immaterial. It is a hypothetical advisory opinion which, on reflection, the Tribunal itself does not seem to have found useful for the purpose of actually resolving anything when it came to R2.
191 As we have said, the significance of R1 seems to be confined to another example of a case in which separate questions that looked useful to everyone at the time have turned out to be not worth the effort.
192 The application is competent. The notices of objection to competency must be dismissed.
193 We have referred above to the submissions for the intervening parties. We have done so because those parties put certain submissions in terms different from those put by CAL.
194 However, we agree with the MMOs that there is an important issue of principle and precedent in play. Everything the intervening parties put could (and should) have been put by CAL. CAL represents the interests of its members. The intervening parties are members of CAL. Members may be taken to act in their own best interests. They become members and grant rights to CAL because they perceive an advantage to them in collective representation. This is one reason why the power of the Tribunal to decide the reasonable conditions in respect of those rights does not offend the principle of legality (see above).
195 In any event, as the MMOs submitted, another price of the benefit of collective representation is that it is the licensor, not the members, who is the necessary party to the Tribunal proceeding. A member who happens to not like the result of a Tribunal proceeding should not expect to be able to intervene in any appeal merely because: (a) it does not like the result, or (b) it would like to have its own representation in a judicial review challenge. This is particularly so in a case such as the present where the intervening parties did not seek to raise any ground of challenge different from those CAL itself raised but merely put some differently worded submissions about the grounds that CAL had raised. All those differently worded submissions could have been put by CAL. There is no suggestion that CAL refused to put those submissions. To the contrary, CAL simply adopted the oral submissions in the appeal on the “mandate” ground put by the intervening parties.
196 As a result, this is not a case where CAL “may not present fully the submissions on a particular issue, being submissions which the court should have to assist it to reach a correct determination”: Roadshow Films Pty Ltd v iiNet Ltd [2011] HCA 54; (2011) 248 CLR 37 at [3]. While the precise way in which a submission is put can be significant (Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170; (2017) 257 FCR 442 at [286] and Helmbright v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 1872 at [45]) CAL could and should have put all of the submissions the intervening parties put. Any notion that it is appropriate for a member of a licensor and the licensor to split their submissions in a challenge to the Tribunal’s orders to ensure the submissions are different must be firmly rejected. CAL is responsible for the rights of its members within CAL’s remit. Within that remit, members have no interests separate from those of CAL. All matters which members may wish CAL to put before this Court are matters for CAL to assess and decide. Without evidence that CAL was not willing to put something a member considered important, the process in this case simply becomes one of CAL putting some submissions and the intervening parties putting other submissions, all in support of each other. That is not consistent with the overarching purpose of s 37M(1) of the Federal Court of Australia Act 1976 (Cth) for civil proceedings to be resolved according to law and as quickly, inexpensively and efficiently as possible.
197 Another concern is this. In support of their applications for leave to intervene, the intervening parties put before this Court evidence that was not before the Tribunal. There is an obvious risk with this kind of evidence. That risk is readily apparent from the submissions the intervening parties put in seeking leave to intervene which extend to matters well beyond those put before the Tribunal.
198 Accordingly, while we accept that the intervening parties were entitled to apply to intervene under r 9.12 of the Federal Court Rules 2011 (Cth) and that the intervening parties in this case did make a useful and different contribution from CAL, we do not accept that this contribution was not one CAL itself could and should have made. In these circumstances we consider that we should treat the written and oral submissions of the intervening parties as having been made by CAL and refuse the intervening parties leave to intervene.
199 CAL’s grounds of challenge must be rejected. CAL should pay each of the MMO’s costs of the proceeding, subject to the intervening parties paying each of the MMO’s costs in connection with the application for leave to intervene.
I certify that the preceding one hundred and ninety-nine (199) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Jagot, Beach and Burley. |
Associate:
