FEDERAL COURT OF AUSTRALIA

Kabushiki Kaisha Sony Computer Entertainment v Stevens [2002] FCA 906

TRADE MARKS – sale of unauthorised copies of computer games – reproduction of electronic representations of trade marks – whether infringement of trade marks.

FAIR TRADING – sale of unauthorised copies of computer games – whether respondent represented that the copies had the sponsorship, approval or affiliation of the applicants.

COPYRIGHT – Copyright Act 1968 (Cth), s 116A – “technological protection measure” – “circumvention device” – computer games contain an access code – games can be played on console only if the access code is recognised by a Boot ROM – whether the access code and Boot ROM constitute a “technological protection measure” within s 10(1) of the Copyright Act 1968 (Cth) – whether the device is “designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright” – whether it is enough for a device to deter or discourage copyright infringement – whether a substantial part of the game’s computer program is reproduced in the console’s RAM – whether part of the program is reproduced “in a material form”.

Copyright Act 1968 (Cth), ss 10, 21(6), 21(1A), 24, 31, 36(1), 37, 38, 47AB, 47B, 47C, 52, 86(a), 98(2), 116A, 116D, 131, 132(5B)

Trade Marks Act 1995 (Cth), ss 120, 122

Copyright Amendment (Digital Agenda) Act 2000 (Cth)

Fair Trading Act 1987 (NSW), ss 42, 44, 49

Copyright Amendment (Parallel Importation) Bill 2002 (Cth)

Copyright Amendment (Digital Agenda) Bill 1999 (Cth)

Copyright Amendment (Digital Agenda Bill) 2000 (Cth)

Copyright, Designs and Patents Act 1988 (UK), s 296

Copyright Act (17 USC § 101)

WIPO Copyright Treaty 1996, art 11

WIPO Performances and Phonograms Treaty 1996, art 18

Directive on the harmonisation of certain aspects of copyright and related rights in the Information Society (Directive 2001/29/EC)

Kabushiki Kaisha Sony Computer Entertainment v Stevens [2001] FCA 1379, cited.

Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 75 FCR 8, followed.

Sony Computer Entertainment Aust Pty Ltd v Jakopcevic [2001] FCA 1520, cited.

Autodesk Inc v Dyason (No 1) (1992) 173 CLR 330, cited.

Australian Video Retailers Association Ltd v Warner Home Video Pty Ltd (2001) 52 IPR 242, followed.

Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300, cited.

Sony Computer Entertainment v Owen [2002] EWHC 45, cited.

MAI Systems Corporation v Peak Computer Inc 991 F2d 511 (9^th Cir 1993), distinguished.

Intellectual Reserve, Inc v Utah Lighthouse Ministry, Inc 75 F Supp 2d 1290 (D Utah 2000), distinguished.

Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, cited.

Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1, cited.

Desktop Marketing Systems Pty Ltd v Telstra Corporation Limited [2002] FCAFC 112, cited.

Dyason v Autodesk Inc (1990) 24 FCR 147, distinguished.

Microsoft Corporation v Business Boost Pty Ltd (2000) 49 IPR 573, distinguished.

Bank of Western Australia Ltd v Commissioner of Taxation (1994) 55 FCR 233, cited.

Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171, cited.

Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1996) 69 FCR 268, cited.

Copyright Law Review Committee, Computer Software Protection (1995)

L Gamertsfelder, “Digitising Copyright Law – An Australian Perspective” (2001) 6 Media & Arts L Rev 13

Copyright Law Review Committee, Draft Report on Computer Software Protection (1993)

Commonwealth Attorney-General’s Department, Copyright Reform and the Digital Agenda (1997)

House of Representatives Legal and Constitutional Affairs Committee, Advisory Report on the Copyright Amendment (Digital Agenda) Bill 1999 (1999)

Pearce & Geddes, Statutory Interpretation in Australia (2001)

Carothers, “Protection of Intellectual Property on the World Wide Web: Is the Digital Millennium Copyright Act Sufficient?” (1999) 41 Arizona L Rev 937

Nimmer, “Brains and Other Paraphernalia of the Digital Age” (1996) 10 Harv J of Law & Technology 1

Hoffmann, “Arguments for the Need for Statutory Solutions to the Copyright Problem Presented by RAM Copies Made During Web Browsing” (2000) 9 Texas Int Prop LJ 97

KABUSHIKI KAISHA SONY COMPUTER ENTERTAINMENT & ORS v STEVENS

N 738 of 2001

SACKVILLE J

SYDNEY

26 JULY 2002

THE COURT MAKES THE FOLLOWING ORDER:

1. The matter be listed for further directions on 9 August 2002 at 9.30 am.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

the proceedings

1                     These proceedings arise out of what the applicants say is conduct by the respondent (“Mr Stevens”) intended to facilitate the use of pirated copies of their “PlayStation” computer games (the “PlayStation games”).  The applicants, three related companies, have pleaded causes of action founded on trade mark infringement, breaches of the Fair Trading Act 1987 (NSW) (“Fair Trading Act”) and contraventions of s 116A of the Copyright Act 1968 (Cth) (“Copyright Act”).

2                     Section 116A of the Copyright Act was introduced by the Copyright Amendment (Digital Agenda) Act 2000 (Cth) (“Digital Agenda Act”), which commenced on 4 March 2001.  It applies, among other circumstances, if a copyright work is protected by a “technological protection measure” and a person, without permission, knowingly sells or distributes a “circumvention device” capable of circumventing the technological protection measure.  The applicants’ case, in substance, is that the PlayStation games, or the Sony PlayStation console on which those games are played (the “PlayStation console”), contain a technological protection measure, as defined in s 10(1) of the Copyright Act, which is designed to prevent unauthorised copies of the games being played on the console.  They contend that Mr Stevens has sold or distributed computer chips having no purpose or use other than circumvention of the technological protection measure and which are therefore circumvention devices for the purposes of s 116A of the Copyright Act.

3                     This is said to be the first case in which relief has been sought pursuant to s 116A of the Copyright Act.  Mr Stevens elected to represent himself in the proceedings.  Although he made some contributions to technical questions that arose in the course of debate, understandably he was not able to offer significant assistance on legal issues.

4                     I have, however, received assistance from the Australian Competition and Consumer Commission (“ACCC”) as amicus curiae.  The ACCC sought leave to appear at the final hearing as amicus curiae on the ground that the case was likely to present important questions of construction concerning s 116A of the Copyright Act.  I granted that leave, subject to certain conditions: Kabushiki Kaisha Sony Computer Entertainment v Stevens [2001] FCA 1379.  In the event, the ACCC filed written submissions, which were developed by Mr White, who appeared at the hearing, in oral argument.  I also granted Mr White leave to ask some questions of Mr Nabarro, an officer of the second applicant (“Sony Europe”) who gave evidence on behalf of the applicants.  The scope of those questions was limited to elucidating technical questions that otherwise would have remained unexplored and unexplained.

5                     It is appropriate to observe, given the novel features of the present case, that it may well have been conducted differently had both parties been legally represented.  For example, the applicants amended their pleadings during the hearing and advanced at a late stage alternative arguments in support of their case that had not previously been foreshadowed.  While I permitted this to be done (in some instances Mr Stevens did not object; in others he fairly accepted that an adjournment would make no difference to his ability to address the issues), the changes in approach made it difficult for the ACCC, as amicus curiae, to address the fresh questions comprehensively.  Similarly, had Mr Stevens been legally represented, there may well have been additional expert evidence and, perhaps, more detailed cross-examination of Mr Nabarro, who gave expert evidence on behalf of the applicants.  I say this not to cast doubt on Mr Nabarro’s evidence (although his evidence was incomplete in some respects) but merely to point out that a later case raising apparently similar issues will not necessarily have the same evidentiary foundation or limitations. 

6                     The present proceedings concern only liability, as an order was made on 14 December 2001, pursuant to Federal Court Rules (“FCR”), O 29 r 2, that the hearing and determination of liability take place before the hearing on all questions of the relief sought.  I should also note that interlocutory orders restraining Mr Stevens until further order from certain conduct are in place.  No suggestion has been made that Mr Stevens is in breach of those orders.

THE COPYRIGHT LEGISLATION

7                     Section 32(1) of the Copyright Act provides that, subject to certain conditions, copyright subsists in an original literary work that is unpublished.  A “literary work” is defined by s 10(1) to include “a computer program or compilation of computer programs”.  The expression “computer program” means:

“a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.”

8                     Copyright, in relation to a work, is the exclusive right, inter alia, to reproduce the work in a material form, to publish the work or to make an adaptation of the work: s 31(1)(a)(i), (ii), (vi).  The “communication right”, conferred by s 31(1)(a)(iv) of the Copyright Act was introduced by the Digital Agenda Act.  This is a new “technology-neutral” right which replaces and extends previous technology-specific rights and is said to be the “centrepiece” of the legislation: Revised Explanatory Memorandum, at 2.  The definition of “communicate” is as follows (s 10(1)):

“make available online or electronically transmit (whether over a path, or a combination of paths, provided by a material substance or otherwise) a work or other subject-matter.”

9                     The expression “material form”, which is used in s 31(1)(a)(i) of the Copyright Act, is defined in relation to a work or an adaptation of a work to include

“any form (whether visible or not) of storage from which the work or adaptation, or a substantial part of the work or adaptation, can be reproduced.”

A reference to a reproduction of a work includes a reference to a reproduction of a substantial part of the work: s 14(1)(b).

10                  Copyright in a literary work is infringed by a person who, not being the owner of the copyright and without the licence of the owner, does or authorises the doing of any act comprised in the copyright: s 36(1).  Copyright in a work is also infringed by the sale or exposing for sale by way of trade of an article if the seller knew, or ought reasonably to have known that the making of the article constituted an infringement of copyright: s 38(1).

11                  Part V, Div 2A of the Copyright Act (ss 116A-116D) was also introduced by the Digital Agenda Act.  The Division is headed “Actions in relation to circumvention devices and electronic rights management”.  Section 116A, relevantly, provides as follows:

“(1)     Subject to subsections (2), (3) and (4), this section applies if

(a)               a work or other subject-matter is protected by a technological protection measure; and

(b)               a person does any of the following acts without the permission of the owner or exclusive licensee of the copyright in the work or other subject matter:

(i)                 makes a circumvention device capable of circumventing, or facilitating the circumvention of, the technological protection measure;

(ii)               sells, lets for hire, or by way of trade offers or exposes for sale or hire or otherwise promotes, advertises, or markets, such a circumvention device;

(iii)             distributes such a circumvention device for the purpose of trade, or for any other purpose that will affect prejudicially the owner of the copyright;

            …; and

(c)                the person knew, or ought reasonably to have known, that the device or service would be used to circumvent, or facilitate the circumvention of, the technological protection measure.

…;

(5)               If this section applies, the owner or exclusive licensee of the copyright may bring an action against the person.

(6)               In an action under subsection (5), it must be presumed that the defendant knew or ought reasonably to have known, that the circumvention device …to which the action relates would be used for a purpose referred to in paragraph (1)(c) unless the defendant proves otherwise.”

12                  The expression “technological protection measure” is defined in s 10(1) to mean:

“a device or product, or a component incorporated into a process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work or other subject-matter by either or both of the following means:

(a)               by ensuring that access to the work or other subject matter is available solely by use of an access code or process (including decryption, unscrambling or other transformation of the work or other subject-matter) with the authority of the owner or licensee of the copyright;

(b)               through a copy control mechanism.”

“Circumvention device” is defined to mean

“a device (including a computer program) having only a limited commercially significant purpose or use, or no such purpose or use, other than the circumvention, or facilitating the circumvention, of an effective technological protection measure.”

It should be noted that, although earlier drafts of the legislation included the expression “effective technological measure” and a definition of “effective”, there is no such definition in the current Copyright Act.  It is only the definition of “circumvention device” that employs the expression “effective technological measure”.  Legislation has been introduced into Parliament which would remove the word “effective” from the definition: Copyright Amendment (Parallel Importation) Bill 2002 (Cth), Schedule 3, cl 1.

13                  Section 116A(3) provides that the section does not apply to the supply of a circumvention device to a person for use for a “permitted purpose”, subject to the person meeting certain requirements.  The permitted purposes include reverse engineering, error correction, security testing, copying by libraries and copying by the Commonwealth or the States for particular purposes: see L Gamertsfelder, “Digitising Copyright Law – An Australian Perspective” (2001) 6 Media & Arts L Rev 13, at 17-21.

14                  Section 116D addresses the remedies that are available in actions under s 116A.

“(1)     The relief that a court may grant in an action under section 116A… includes an injunction (subject to such terms, if any, the court thinks fit) and either damages or an account of profits.

(2)             If, in an action under section 116A…the court is satisfied that it is proper to do so, having regard to:

(a)               the flagrancy of the defendant’s actions that are the subject of the action; and

(b)               any benefit shown to have accrued to the defendant as a result of those acts; and

(c)                any other relevant matters;

the court may, in assessing damages, award such additional damages as it considers appropriate in the circumstances.”

15                  Although this case does not involve a criminal prosecution, it is worth observing that s 132(5B) of the Copyright Act makes it an offence, inter alia, to make, sell or promote a circumvention device, if the person knows or is reckless as to whether the device will be used to circumvent or facilitate the circumvention of a technological protection measure.  The offence carries a maximum penalty of five years imprisonment.

16                  Reference was made in the course of argument to provisions in Div 4A of Part III of the Copyright Act, which is headed “Acts not constituting infringements of copyright in computer programs”.  Section 47B of the Copyright Act permits reproduction of computer programs for normal use or study.  It provides as follows:

(1)               Subject to subsection (2), the copyright in a literary work that is a computer program is not infringed by the making of a reproduction of the work if:

(a)               the reproduction is incidentally and automatically made as part of the technical process of running a copy of the program for the purposes for which the program was designed; and

(b)               the running of the copy is done by, or on behalf of, the owner or licensee of the copy.

(2)               Subsection (1) does not apply to the making of a reproduction of a computer program:

(a)               from an infringing copy of the computer program; or

(b)               contrary to an express direction or licence given by, or on behalf of, the owner of the copyright in the computer program to the owner or licensee of the copy from which the reproduction is made when the owner or licensee of that copy acquired it.”

Section 47C of the Copyright Act permits back-up copies of computer programs to be made.  The expression “computer program” is defined in s 47AB, for the purposes of Div 4A, to include

“any literary work that is:

            (a)        incorporated in, or associated with, a computer program; and

(b)        essential to the effective operation of a function of that computer program.”

THE APPLICANTS’ CASE

the pleadings

17                  The amended statement of claim pleads that the first applicant (“Sony Japan”) is the manufacturer and distributor of PlayStation consoles and computer games for use with such consoles.  Sony Japan is said to be the owner of two specified trade marks (the “Sony Trade Marks”).  The second applicant (“Sony Europe”) is said to be a subsidiary of Sony Japan.  The third applicant (“Sony Australia”) is said to be a subsidiary of Sony Europe and an authorised user of the Sony Trade Marks.

18                  The applicants’ pleaded trade mark case relies on s 120(1) of the Trade Marks Act 1995 (Cth) (“Trade Marks Act”), which provides as follows:

“A person infringes a registered trade mark if the person uses a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.”

19                  The applicants allege that Mr Stevens sold computer games for use with PlayStation consoles and that those games stored electronic representations of marks that were substantially identical with or deceptively similar to the Sony Trade Marks.  This is said to constitute a use of the marks in relation to goods in respect of which the Sony Trade Marks are registered.  It is further alleged that the computer games supplied by Mr Stevens were not manufactured by or with the licence of Sony Japan or Sony Australia and that he acted without their consent.  Accordingly, so it is pleaded, Mr Stevens infringed the Sony Trade Marks.

20                  The amended statement of claim next alleges that Mr Stevens engaged in conduct that was misleading, or likely to mislead, in breach of ss 42, 44 and 49 of the Fair Trading Act.  The applicants plead that they have acquired in Australia and world wide an extensive reputation in the Sony Trade Marks and in the goods sold by them.  It is said that Mr Stevens, by supplying and offering to supply computer games and promoting such games under or by reference to the Sony Trade Marks, represented, inter alia,  to members of the public, in trade or commerce, that the games had the sponsorship, approval or affiliation of the applicants or one of them.

21                  It is further alleged that Sony Australia suffered loss or damage by reason of Mr Stevens’ breaches of the Fair Trading Act.

22                  The third cause of action pleaded arises under the Copyright Act. Sony Europe is said to be the owner or exclusive licensee of the copyright in a range of computer programs (“the Works”) or, alternatively, cinematograph films (“the Films”) embodied in the PlayStation games for use with the PlayStation console.  The pleading alleges that in excess of 150 PlayStation games for use with the PlayStation console embodying the Works or, alternatively, the Films, have been released in the United Kingdom and other countries in Europe by Sony Europe under or by reference to the Sony Trade Marks, including the PlayStation games listed in Schedule 1 to the amended statement of claim.

23                  Sony Australia is said to be the licensee of the copyright in the Works and the Films.  It is then alleged that each of the PlayStation games for use with the PlayStation embodying the Works and the Films is protected by a “technological protection measure” as defined in s 10(1) of the Copyright Act.  This measure is said to comprise the access code contained within a track on each of the CD-ROMS on which each of the Works is contained and a device featured in the PlayStation console which ensures that access to the Works and the Films is available solely by use of the access code.  (It should be noted that the access code was also referred to in the evidence and submissions variously as the encryption code and encrypted data.)

24                  The applicants plead that Mr Stevens sold devices having a limited commercially significant purpose or use, or no such purpose or use, other than the circumvention, or facilitation of the circumvention of the “effective technological protection measure”.  It is further alleged that Mr Stevens knew or ought reasonably to have known that the devices sold by him would be used to circumvent, or facilitate the circumvention of, the technological protection measure.  In these circumstances, Mr Stevens is said to have contravened s 116A of the Copyright Act.

the Circumvention Device claim

25                  The nature of the applicants’ claims against Mr Stevens alleging infringement of the Sony Trade Marks and breaches of the Fair Trading Act appears clearly enough from the pleadings.  It is necessary, however, to explain in more detail how the applicants put their case under s 116A of the Copyright Act.

26                  Mr Bannon SC, who appeared with Mr Cobden for the applicants, identified the elements of a claim under s 116A as follows:

(i)         a work (s 116A(1)(a))

(ii)        is protected by a technological protection measure (s 116A(1)(a))

(iii)       and a person (s 116A(1)(b)

(iv)       without the permission of the owner or exclusive licensee of the copyright in the work (s 116A(1)(b))

(v)        sells or distributes a circumvention device (s 116A(1)(b)(ii) and (iii))

(vi)       capable of circumventing or facilitating the circumvention of, the technological protection measure (s 116A(1)(b)(i))

(vii)      and the person knew, or ought reasonably to have known, that the device…would be used to circumvent, or facilitate the circumvention of, the technological protection measure (s 116A(1)(c)).

27                  As to (i), the applicants contended that the relevant “work” was the original computer program stored on each of the CD-ROMs constituting the PlayStation games identified in Schedule 1 to the statement of claim. Since the definition of “literary work” in s 10(1) of the Copyright Act includes “a computer program”, each of the computer programs on the CD-ROMs was a literary work in respect of which copyright could subsist.  On this basis, according to Mr Bannon, it was not in dispute that Sony Europe was the owner or exclusive licensee of the copyright in the computer programs.

28                  As to (ii), each work was protected by a “technological protection measure” as defined in s 10(1) of the Copyright Act.  Mr Bannon identified the device or product that was “designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work” as

• the chip, described in evidence as the “Boot ROM”, located on the circuit board of the PlayStation console which reads and verifies the access code stored on a genuine PlayStation game;
• the access code stored on each PlayStation game; or
• a combination of the Boot ROM and the access code.

On the evidence, so it was said, one or other of these devices (or the combination of them) functioned by “ensuring that access to the work [the computer program] [was] available solely by use of an access code or process…with the authority of the owner or licensee of the copyright”.

29                  Mr Bannon advanced two alternative theories as to why the relevant protection device (or combination of devices) could be said to be designed in the ordinary course of its operation “to prevent or inhibit the infringement of copyright in a work”.  The first, which he propounded in written submissions, was that the device inhibited the making of infringing copies of PlayStation games by rendering the exercise pointless.  Unless the protective device could be circumvented, infringing copies would be unusable and therefore unsaleable.  Unauthorised reproduction of the PlayStation games (an infringement of copyright by virtue of s 36(1) of the Copyright Act), or unauthorised importation for the purpose of sale (s 37(1)), would be a futile activity.  Similarly, the sale of infringing copies of the PlayStation games (an infringement of copyright by virtue of s 38(1) of the Copyright Act) would effectively be curtailed.

30                  The alternative theory was put forward in the applicants’ written outline of their opening statement.  This theory was based on evidence that, in the course of playing a PlayStation game, the console stored an electronic copy of portion of the computer program on its RAM (Random Access Memory), thereby permitting the game, or a portion of it, to be played even after the CD-ROM was removed from the console.  Reproduction of a computer program, or a substantial part of it, on the RAM is, so it was argued, an infringement of copyright in a computer program.  The protective device was designed to prevent the infringement of copyright that would take place if a substantial part of the computer program stored on the CD-ROM was reproduced in the RAM.

31                  As to (iii) and (iv), Mr Stevens was the person who had sold or distributed a “circumvention device” and he had done so without the permission of Sony Europe.

32                  As to (v), Mr Stevens had sold, offered or exposed for sale or distributed a circumvention device, namely a programmed computer chip, known as the “mod chip” or “converter chip”, that he had installed in PlayStation consoles.  The mod chip satisfied the definition of a “circumvention device” because it had no purpose or use, or only a limited commercially significant purpose or use, other than the circumvention, or facilitating the circumvention of a technological protection measure, namely the Boot ROM, the access code or both. 

33                  As to (vi), the mod chips installed by Mr Stevens were in fact capable of circumventing, or facilitating the circumvention of, the relevant technological protection measure.

34                  As to (vii), the evidence established that Mr Stevens knew that the mod chips he installed in Sony consoles would be used to circumvent or facilitate the circumvention of the relevant technological protection measure.  In any event, the applicants were entitled to the benefit of the presumption created by s 116A(6) of the Copyright Act, namely that Mr Stevens knew or ought to have known that the circumvention devices installed by him would be used for the purpose identified in s 116A(1)(c).  That presumption had not been rebutted by Mr Stevens’ evidence.

35                  The applicants, by a late amendment to the pleadings, alleged that the PlayStation games embodied cinematograph films.  They relied on the decision of the Full Court in Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 75 FCR 8, for the proposition that the aggregate of visual images generated by the PlayStation games constituted a “cinematograph film” within the definition in s 10(1) of the Copyright Act and were thus the subject of copyright under Part IV of the Act.  This was because the aggregate of visual images was “embodied” in the computer program stored on the CD-ROM.  It was no objection to this conclusion that the images appearing on the screen were dependent on player input; nor that the computer program could also be the subject of copyright by virtue of Part III of the Copyright Act.  The applicants were the persons who did all things necessary for the production of the first copy of the Films and thus copyright subsisted in them: Copyright Act, ss 22(4), 90.  In any event, since the name of Sony Europe appeared on each copy of the Films, it was presumed to be the maker of the Films: Copyright Act, s 131.

36                  According to Mr Bannon, the operation of a PlayStation game involves storing in the RAM of the PlayStation console a substantial part of each of the Films.  This constitutes making a copy of the Film since, with the aid of the CPU (Central Processing Unit), the sources and images are capable of being reproduced on screen from the RAM.  The Boot ROM and access code prevent infringement of copyright in the Films by this form of copying.

the facts

The Sony Companies

37                  Sony Japan was established in Japan in November 1993, as a subsidiary of Sony Corporation.  Sony Europe is a subsidiary of Sony Japan.  The third applicant Sony Australia is a subsidiary of Sony Europe and was incorporated on 4 June 1997.

38                  Sony Japan’s business includes the manufacture and distribution of

·        the Sony PlayStation console;

·        the PlayStation 2 computer entertainment system; and

·        software and accessories for use with the PlayStation and PlayStation 2 consoles.

Sony Europe is responsible for the development, marketing and distribution of PlayStation hardware, software and accessories in a number of European countries, as well as Australia and New Zealand.  The present case concerns the PlayStation console and related software and accessories, not the PlayStation 2 computer entertainment system.

39                  Sony Australia’s business includes the sale, marketing and distribution of PlayStation consoles, games and accessories.  Sony Japan exercises complete control over Sony Australia’s trading activities.  In particular, Sony Australia is required to order all consoles, games and accessories from Sony Europe or third parties licensed by Sony Europe.  Sony Europe has the right to limit the quantity supplied to Sony Australia during any given period and the right to set the transfer price of the products acquired by Sony Australia.  In turn, Sony Japan controls Sony Europe’s activities.

40                  The PlayStation console was launched by Sony Japan in Japan in December 1994; by Sony Entertainment America Inc (“Sony America”) in the United States in September 1995; by Sony Europe in various European countries in September 1995; and by Sony Music Entertainment Australia Pty Ltd (“Sony Music Australia”) in November 1995.  Sony Australia took over the supply and distribution in Australia of the Sony products following its incorporation in 1997.

The PlayStation System

41                  The PlayStation console is essentially a video apparatus featuring a deck, a control and software designed for the playing of CD-ROMs.  The PlayStation console, when used in conjunction with compatible computer game software, simulates three dimension action for the player.

42                  The PlayStation console plugs into the back of a television set or monitor.  The console itself consists of the CPU, a custom graphics processing unit (“GPU”), a sound processing unit, a read-only memory (“ROM”) based internal operating system, RAM, video memory and, when inserted, CD–ROM based software media.  The components of the PlayStation console communicate together via a main “bus” and a “sub bus”.  All CD controller functions communicate via the “sub-bus”.  The PlayStation console supports two game controllers that connect to the front of the console and communicate directly with the CPU, via a serial communication protocol.

43                  The colour television systems operating in Japan, South East Asia and North America follow the National Television Systems Committee (“NTSC”) standard.  Accordingly, PlayStation consoles manufactured for distribution in those markets are NTSC format consoles, and all PlayStation games manufactured by or with the licence of Sony Japan or Sony America for distribution in those markets are in NTSC format.

44                  The television systems used in Europe and Australia follow the Phase Alternating Line (“PAL”) standard.  Accordingly, PlayStation consoles manufactured for distribution in the European and Australian markets are PAL format consoles and all PlayStation games manufactured by or with the licence of Sony Japan or Sony Europe for distribution in those markets are in PAL format.  All PlayStation games in PAL format are manufactured by an Austrian company under licence from Sony Europe, although the Austrian company apparently is authorised to sub-licence Sony Music Australia to manufacture PAL format PlayStation games.

45                  The PlayStation console was designed to allow the operation of PlayStation games manufactured by or with the licence of Sony Japan that are distributed in the relevant region.  The console also permits the audio playback of standard audio CD media.  Authorised PlayStation CD-ROM software is stored on a proprietary CD that is dark blue, although it may appear black to the naked eye. 

46                  The PlayStation software incorporates an access code, or a number of encrypted sectors of data that cannot be reproduced by conventional CD recording or copying devices (usually referred to as “burning” mechanisms).  The access code is stored on an encrypted portion of the CD-ROM and essentially consists of a string of characters.  This string must be read by the Boot ROM located within the PlayStation console if the particular game is to be played.  The Boot ROM recognises whether there is an access code and specifically what kind of access code it is.  The access code is inaccessible to standard CD-ROM “burners” or standard CD replication manufacturing parts.

47                  The access code is different for different areas of the world. Thus Sony CD-ROMs sold in Japan have their own access codes, as do those in the United States.  Those sold in Europe and other areas with a PAL television standard, including Australia and New Zealand, have another access code.  It follows, for example, that a PlayStation game purchased in the United States cannot be played on an unmodified PlayStation console purchased in Australia.

48                  The CD sub-bus controller is designed to monitor the disc cover door switch to prevent the user from changing games once the encrypted information has been read and the CD-ROM determined to be authorised.  In other words, the design prevents the user gaining access to the console with an authorised CD-ROM and then substituting an unauthorised copy.

49                  To operate the PlayStation console, the user opens the disc cover and inserts an authorised CD-ROM into the CD drive.  When the disc cover is closed, the CD drive looks for the access data on the encrypted portion of the CD-ROM.  The access code verifies that the CD-ROM has been manufactured by or with the licence of Sony Japan and also verifies the territorial region for which the CD-ROM was published.  If verification occurs, the PlayStation console continues to load the software required for the game to be played.  If verification does not occur, the loading of software is halted and the user is prompted by the screen to insert an authorised CD-ROM.  If the CD-ROM does not contain the requisite access code to confirm that it is an authorised product, but is found to have the structure of a conventional audio CD, the console loads a CD audio menu contained in its operating system.

50                  Mr Nabarro said that when a PlayStation game is inserted into the console, part of the “game code” stored on the CD-ROM is downloaded and copied into the console’s RAM.  The RAM’s capacity is limited to two megabytes.  Since the game code may consist of up to 580 megabytes (a standard form CD-Rom can store up to 650 megabytes of data), only a small section of the game code is downloaded and copied.  Once the player has selected a particular level of the game from the menu, a portion of the game code relating to that level will be copied into the RAM, to a maximum of two megabytes.  The precise proportion of the game code that is downloaded and copied will depend on the amount of data embodied in the code.

51                  Once a portion of the game code has been copied into the RAM, it is stored there.  The storage in RAM is temporary, in the sense that the data is only stored there until the PlayStation console is shut down.  Moreover, as Mr Nabarro explained, the data stored in the RAM will be “flushed” as new instructions are transferred from the PlayStation game’s code.  Mr Nabarro was also asked whether the portion of the game code stored in the RAM could be extracted and reproduced.  His answer was that this could not be done without developing hardware which would enable the process to be reversed.

52                  As Mr Nabarro explained it, a CD-ROM comprises one continuous track from beginning to end.  By contrast the RAM in the PlayStation console sits on a highway of a data bus of 32 lanes.  This enables the data, in effect, to be delivered from the RAM down 32 highways or streams at one time, thereby ensuring that the data is processed much more quickly.  Consequently, although the loading of the game code from the CD-ROM to the RAM takes some time, the data on the RAM can be called on and used instantaneously.  The CPU calls on portions of the game code stored in the RAM as required and feeds the data into the GPU.  From there the data is transmitted into a video RAM system and is then converted into analogue signals which a television can interpret and display.  The conversion takes place via a terminal video converter that changes digital electronic signals into analogue signals.  The role of the GPU, as explained by Mr Nabarro, is to manipulate the data so as to create the scenery, the colours, the characters and other images that ultimately appear on the screen.

53                  Mr Nabarro said that the data called upon from the console’s RAM has the same appearance at the interface with the CPU as it does on the RAM.  By that he meant that an observer using a digital analysing oscilloscope, or similar equipment, would see “spikes and troughs of digital [ones] and zeros” which can be frozen at a given point and printed out.  The processing of this binary language takes place within the CPU.

54                  Products are available which have the capacity to override the techniques employed by the applicants to restrict the use of PlayStation consoles to authorised copies of PlayStation games.  These products are known as “mod chips” or “converter chips”.  They were described by Mr Nabarro as programmed computer chips which override the PlayStation console’s internal operating system to allow the console to load the unauthorised software.  The chips do this by instructing the console that both the validity and territorial codes are acceptable for operation by the console’s sub-bus controller, even where the required access code is present on the CD-ROM inserted into the console.  A console that is modified by the addition of a mod chip is commonly referred to as a “chipped console”.

Trade Marks

55                  Sony Japan is the registered owner of the Sony Trade Marks, namely “PlayStation” and “PS/device” in class 9, in respect of computer games players combined with CD-Rom drives and software therefor (the “PlayStation mark” and “PS mark”, respectively).  The Sony Trade Marks were registered by the Registrar of Trade Marks on 25 June 1996 and remain in force until 10 October 2004. 

56                  All PlayStation games manufactured by or with the licence of Sony Japan are sold in compact disc or digital video disc format.  The PlayStation and PS marks appear on every disc containing a PlayStation game published by or with the licence of Sony Japan.  The marks also appear on the paper insert inside the case and on the instruction manual for the game.  Further, a digital representation of the marks is embodied in the computer program stored on the CD-ROM.  When the disc is inserted into a console connected to a television, the console reads the digital representations of the marks and displays those marks on the screen.

Copyright

57                  It was not in dispute that Sony Europe is the owner or exclusive licensee of the copyright in a range of PlayStation games, including those involved in the present case, and that Sony Australia is the licensee of the copyright in those games in Australia.  The CD-ROMs on which the PlayStation games are recorded and the packaging for the games bear a copyright notice warning that unauthorised copying and other infringements of copyright are prohibited.

Mr Stevens’ Activities

58                  The evidence established that Mr Stevens supplied and installed mod chips in PlayStation consoles on three occasions after the Digital Agenda Act commenced on 4 March 2001.  He also sold or supplied unauthorised copies of PlayStation games.  These transactions took place at Mr Stevens’ rented premises in Kensington.  The occasions on which these events occurred were as follows:

• On 7 December 1999, Mr Stevens supplied to Mr Nair copies of two PlayStation games, namely “Croc 2” and “Medi Evil”, for the price of $30.
• On 8 April 2001, Mr Stevens supplied and installed a mod chip into a PlayStation console at the request of Mr King, an inquiry agent.  Mr Stevens charged $45 for this service.
• On 22 April 2001, Mr Stevens supplied to Mr King two unauthorised copies of PlayStation games, namely Motor Races World Tour and Porsche 2000, for the price of $24.
• On 28 September 2001, Mr Stevens supplied and installed a mod chip into a PlayStation console at the request of Mr Godhard, a paralegal.  Mr Stevens charged $70 for this service.
• On 16 November 2001, Mr Stevens supplied and installed a mod chip into a PlayStation PSX console (an earlier model than the others) at the request of Mr Frogley, a paralegal.  Mr Stevens charged $45 for this service.

59                  The unauthorised copies of the PlayStation games supplied by Mr Stevens could not be played on an “unchipped” (unmodified) PlayStation console because they did not have the requisite access code.  The same copies could be played on the “chipped” PlayStation consoles that had been modified by Mr Stevens.  When they were played, representations of the PlayStation and PS marks appeared on the television screen.

60                  Mr Stevens denied that he had supplied and installed chips in PlayStation consoles at any time after March 2001, when s 116A had come into force.  He acknowledged that he supplied and installed a considerable volume of chips for PlayStation consoles before March 2001, but claimed that any chipping of consoles thereafter was done by his flatmate, whom he reluctantly identified as “Ted”.

61                  The evidence overwhelmingly supports the conclusion that Mr Stevens himself sold and installed chips in PlayStation consoles after March 2001.  He was the person with whom the four witnesses for the applicants dealt.  He was the one who handed over the consoles with the chips installed and took the money from each of them.  Mr Stevens himself placed and paid for advertisements in the Australian Trading Post and elsewhere referring to “Sony PlayStation best quality chip installations”.  He answered telephone inquiries at the number given in the advertisements, which was the same number appearing in the telephone directory under his name.  To the extent Mr Stevens’ evidence was to the contrary, I do not accept it.

62                  There was some debate as to whether the flatmate actually existed.  I do not think it matters.  Whether or not the flatmate existed, Mr Stevens himself supplied and installed chips in PlayStation consoles on the occasions I have identified.  He also supplied unauthorised copies of PlayStation games on the occasions I have identified.  Lest there be any doubt about it, I accept the evidence of Messrs Nair, King, Godhard and Frogley.

63                  At the time Mr Stevens supplied and installed the chips he was well aware that the purpose of installing the chip into the PlayStation console was to enable the console to play copies of the PlayStation games that did not carry the access code.  He was aware that many, if not all, such copies would be copies made without the authority or licence of any of the applicants.  Mr Stevens was also aware that the copies of PlayStation games supplied by him would, when inserted into a “chipped” console, display the PlayStation trademark on the screen.

trade mark infringement

64                  As I have found, Sony Japan is the registered owner of the Sony Trade Marks.  I have also found that Mr Stevens, on two separate occasions, supplied unauthorised copies of PlayStation games to purchasers (Mr Nair on 7 December 1999 and Mr King on 22 April 2001).  The unauthorised copies of the games stored in electronic form representations of the Sony Trade Marks.  When the unauthorised copies were played on chipped PlayStation consoles they reproduced the Sony Trade Marks.  If it matters, I am satisfied that Mr Stevens was aware, at the time he sold the unauthorised copies, that the copies, when played, would reproduce the Sony Trade Marks.  I am also satisfied that Mr Stevens held himself out in or about December 1999 and in or about April 2001, as willing to supply unauthorised copies of an extensive range of PlayStation games, each of which would have stored electronic representations of the Sony Trade Marks.

65                  Mr Stevens, by offering to sell and selling the unauthorised copies of the PlayStation games, used as trade marks signs that were substantially identical to the Sony Trade Marks in relation to goods in respect of which the marks were registered.  Mr Stevens did not suggest that any of the circumstances specified in s 122 of the Trade Marks Act (which sets out the circumstances in which a trade mark is not infringed) applied to the case.  Mr Stevens therefore infringed the Sony Trade Marks: see Sony Computer Entertainment Aust Pty Ltd v Jakopcevic [2001] FCA 1520.

fair trading act claim

66                  The applicants’ pleaded case under the Fair Trading Act relied on a number of representations allegedly made by Mr Stevens.  As developed in the written and oral submissions, the applicants limited their case to a claim that Mr Stevens had represented that the pirated copies of the PlayStation games sold by him had the sponsorship, approval or affiliation of the applicants, or one of them.  If Mr Stevens made such a representation it would undoubtedly have been false and the applicants may well have established that he had engaged in misleading and deceptive conduct in contravention of s 42 of the Fair Trading Act.  The question, however, is whether Mr Stevens made the representation alleged.

67                  Mr Bannon relied only on Mr Stevens’ dealings with Mr King in April 2001 to support the applicants’ case.  The effect of Mr King’s evidence was as follows.

68                  Mr King is a private inquiry agent.  He went to Mr Stevens’ residential premises on 8 April 2001 and asked him to modify a PlayStation console to play American and “burnt games”.  When Mr King collected the chipped console he had a conversation with Mr Stevens to the following effect (Mr King is speaking in the first person):

“I said:            ‘You don’t sell games do you?’

He said:           ‘See that website’.

He then pointed to a sticker which had been placed on the top of the console and I observed that it featured the words ‘Web: superia.iwarp.com’.  We then continued the conversation to the following effect:

He said:           ‘Here’s where you will find our list of games.  Its about 5 pages.’

I said:              ‘Good’.

He said:           ‘If you want to order give me a ring, then I order them and they deliver them here every weekend’.

I said:              ‘O.K.  Thanks very much’.”

69                  On 10 April 2001, Mr King had a telephone conversation with Mr Stevens as follows:

“I said:            ‘Hello,  you modified a PlayStation console for me last week and I ordered a couple of games on the Internet site you gave me and I haven’t had a reply yet’.

He said:           ‘No you won’t, they don’t know you.  Just ring me and order the games you want’.

I said.              ‘O.K.  Can I order a couple now?’

He said:           ‘Yeah, what are they?’

I said:              ‘Motor Racer World Tour and Porsche 2000’.

He said:           ‘No problem, they will be here next Saturday.”

70                  On 22 April 2000, Mr King attended the same residential premises and collected the two compact discs in plastic cases, paying a total of $24.  I infer from the evidence that the amount paid by Mr King was substantially less than the usual retail price of authorised copies of PlayStation games.

71                  The website referred to by Mr Stevens was headed simply “Playstation Games” and contained a list of over 250 titles.  It is important to note, however, that Mr Bannon did not invite me to find that the website was established or maintained by Mr Stevens.  Nor did Mr Bannon suggest that Mr Stevens was responsible for any representations made on the website (perhaps because the applicant’s case was not pleaded this way).  He relied simply on the fact that Mr Stevens had said to Mr King that he could find “our list of games” on the website.

72                  It is necessary to put the discussion between Mr Stevens and Mr King in context.  Mr King was a private investigator who introduced himself to Mr Stevens as someone who wanted a console chipped.  He went to Mr Stevens’ home in order to have the work done and to collect the copies of the two games he had ordered.  It was not of course suggested that Mr King had understood Mr Stevens to be making a representation that his products or business were associated with any of the applicants.  Mr King knew perfectly well that Mr Stevens was supplying him with unauthorised copies of the games.  Had the same conversation taken place between Mr Stevens and one of his customers who was not a private investigator, it is difficult to believe that the customer would have understood Mr Stevens’ reference to the website as intended to do anything other than identify a catalogue of PlayStation games of which Mr Stevens could obtain unauthorised copies.  Perhaps for this reason, the applicants adduced no evidence that anyone had understood Mr Stevens to be representing that he or the products he was supplying had any affiliation with the applicants.

73                  In my opinion, it verges on the fanciful to suggest that Mr Stevens made the representation alleged to Mr King  Whatever else Mr Stevens may have been doing, he was not representing that his activities had the imprimatur of any of the applicants.  I reject the claim founded on the Fair Trading Act.

the claim under s 116A OF THE COPYRIGHT ACT

the legislative history of s 116a of the copyright act

74                  The immediate origins of s 116A lie in two World Intellectual Property Organisation (“WIPO”) treaties, namely the WIPO Copyright Treaty (“WCT”) and the WIPO Performances and Phonograms Treaty (“WPPT”), even though Australia is not a signatory to either treaty.  Article 11 of the WCT provides as follows:

“Contracting Parties shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law.”

Article 18 of the WPPT imposes similar obligations with respect to performers and producers of sound recordings.

75                  Prior to the conclusion of those treaties, however, the Copyright Law Review Committee (“CLR Committee”) in its report, Computer Software Protection (1994) addressed the use of locking devices on computer programs.  The CLR Committee pointed out (par 10.90) that many products distributed for a personal computer market have some form of protection to prevent copying of the program or, as in Autodesk Inc v Dyason (No 1) (1992) 173 CLR 330, to prevent unauthorised use of the program.  The protection could take the form of a program lock, such as a password, or a hardware lock, such as the AutoCAD device at issue in Autodesk v Dyason (No 1).

76                  The CLR Committee had previously proposed, in its Draft Report on Computer Software Protection (1993), at par 10.63, that the modification of a locked computer program for the purpose of circumventing the lock should not be permitted.  The CLR Committee noted that some submissions had cautioned against locks themselves being used to circumvent exceptions to the rights of copyright owners.  The CLR Committee repeated its recommendations in its final report, but proposed that they should be subject to provisions for back-up copying, interoperability with other programs and error correction (par 10.94).  The CLR Committee also recommended, consistently with s 296 of the Copyright, Designs and Patents Act 1988 (UK), that copyright owners and their exclusive licensees should have the right to prevent the commercial manufacture, importation, distribution or possession of devices designed to facilitate the unauthorised circumvention of devices applied to protect computer programs from unauthorised copying (par 16.42).

77                  In July 1997, the Commonwealth Attorney-General’s Department and the Department of Communications and the Arts prepared a Discussion Paper, Copyright Reform and the Digital Agenda (“Digital Agenda Discussion Paper”), as part of a consultation process to determine whether Australia should sign the WCT and WPPT.  The Digital Agenda Discussion Paper invited comment as to how “effective technological measures” could be identified in a “general, technology-neutral way”.  It indicated that the Government was aware of technological systems for

“.         encrypting broadcast signals so that only authorised subscribers who have been supplied with a decrypting device can receive the signal;

  .         ‘locking’ computer programs and other materials in electronic form and accessed using a computer against copying of the program or other work, including locking materials on an Internet site against unauthorised access (so that payment for authorised access can be obtained); and

  .         ‘spoiling’ copies sought to be made of materials recorded on compact discs and cassette tapes, so as to prevent unauthorised copying.”

78                  The Digital Agenda Discussion Paper proposed, inter alia, that the manufacture, importation and possession for commercial distribution of unauthorised equipment for circumventing “locks”

“.         on copies of computer programs and other copyright materials in electronic form and accessed using a computer; and

  .         on materials on Internet sites”

be made criminal offences (par 5.10).  It made the same recommendation in relation to unauthorised equipment for circumventing “spoiler” devices incorporated on compact discs.

79                  In February 1999, the Government released an Exposure Draft and Commentary on the Digital Agenda Copyright Amendments (“Exposure Draft”).  The Exposure Draft provided a commentary on the Copyright Amendment (Digital Agenda) Bill 1999 (the “First Digital Agenda Bill”), which was substantially based on the Digital Agenda Discussion Paper.  The Exposure Draft pointed out that the First Digital Agenda Bill had drawn upon a proposed European Commission Directive on the harmonisation of certain aspects of copyright and related rights in the Information Society (the “EC Directive”) (which was adopted by the European Parliament on 22 May 2001: Directive 2001/29/EC).  The EC Directive included Article 6 as follows:

“1.       Member States shall provide adequate legal protection against any activities, including the manufacture or distribution of devices or the performance of services, which have only limited commercially significant purpose or use other than circumvention, and which the person concerned carries out in the knowledge, or with reasonable grounds to know, that they will enable or facilitate without authority the circumvention of any effective technological measures designed to protect any copyright or any rights related to copyright as provided by law….

2.         The expression ‘technological measures’, as used in this Article, means any device, product or component incorporated into a process, device or product designed to prevent or inhibit the infringement of any copyright or any rights related to copyright as provided by law….  Technological measures shall only be deemed ‘effective’ where the work or other subject matter is rendered accessible to the user only through application of an access code or process, including decryption, descrambling or other transformation of the work or other subject matter, with the authority of the right holders.”

The Exposure Draft quoted the Explanatory Memorandum to the EC Directive (par 82), as follows:

“It is not directed simply against ‘the circumvention of technological measures’ as in the WIPO Treaties, but covers any activity, including preparatory activities such as the manufacture and distribution, as well as services, that facilitate or enable the circumvention of these devices.  This is a fundamental element, because the real danger for intellectual property rights will not be the single act of circumvention by individuals, but the preparatory acts carried out by commercial companies that could produce, sell, rent or advertise circumventing devices.”

80                  The key definitions in the First Digital Agenda Bill were these:

“circumvention device means a device having only a limited commercially significant purpose or use other than the circumvention, or facilitating the circumvention, of any effective technological protection measures.

technological protection measure means a device or product designed to prevent or inhibit the infringement of copyright subsisting in any work or other subject-matter.

For the purposes of this Act, a technological protection measure is taken to be effective only if access to the work or other subject-matter protected by the measure is available solely by use of an access code or process (including decryption, descrambling or other transformation of the work or subject-matter) with the authority of the owner of the copyright in the work or subject-matter.”

The Exposure Draft commented that the definition of “technological protection measure” was a simplified version of that provided in the EC Directive.

81                  The proposed cl 116A of the Copyright Act was expressed to apply if a work or other subject matter was protected by “effective technological protection measures” and a person did certain things without permission.  These included making or importing a “circumvention device capable of circumventing or facilitating circumvention of those measures”: cl 116A(1)(b)(i).  The proposed section applied only if the person knew or was reckless as to whether the device would be used to circumvent the measure and for the purpose of infringing copyright in the work of other subject-matter: cl 116A(1)(c).

82                  The First Digital Agenda Bill was amended prior to its introduction into Parliament as the Copyright Amendment (Digital Agenda) Bill 1999 (the “Digital Agenda Bill 1999”).  The definition of “effective technological protection measure” condensed into one the previous definitions of “technological protection measure” and “effective”.  The new definition retained the words “designed…to prevent or inhibit the infringement of copyright”, apparently taken from the EC Directive.  It also included the expression “in the ordinary course of its operation”.  According to the Explanatory Memorandum to the Digital Agenda Bill 1999 (par 15), this expression was inserted to foreclose an argument that a measure could not be an effective technological protection measure because access could be gained through unlawful means.

83                  The definition of “circumvention device” in the Digital Agenda Bill 1999 was similar to that in the First Digital Agenda Bill except that it specifically included a “computer program” as a device.  The definition also included a device having no purpose or use other than the circumvention of an effective technological protection measure.  The amended definition therefore applied to devices having only a limited purpose or use, or no purpose or use, other than the circumvention of any effective technological protection measures.

84                  The Digital Agenda Bill 1999 was the subject of a report by the House of Representatives Legal and Constitutional Affairs Committee, Advisory Report on the Copyright Amendment (Digital Agenda) Bill 1999 (1999) (“HR Committee Report”).  The HR Committee Report identified two types of technological measures to protect copyright materials, namely access control measures and copy control measures.  The difference was explained this way (par 4.11):

“Access control measures allow the copyright owner to control who has access to the copyrighted material.  Examples of access control measures include password protections, file permissions and encryption.  Copy control measures are based on the premise that a user already has some lawful access to the work, and the measures seek to control what the user can then do with the lawfully obtained copyrighted material.  An example of a copy control mechanism is a mechanism that allows first generation copies but prevents second and subsequent generation copies.”

The HR Committee Report pointed out that copy control measures are more closely allied with copyright and the infringement of copyright, than access control measures which seek to prevent all access to copyright material, not only that which is unlawful.

85                  The HR Committee Report noted that copyright owners and users had disagreed as to the scope of the definition of “effective technological protection measure”.  Copyright users maintained that linking protection measures to copyright infringement was critical and that to include access control measures in the definition would extend copyright law, not merely enforce it.  There was also concern about the inclusion of the words “in the ordinary course of its operation” and the lack of clarity in the definition.  The HR Committee Report’s view was that the definition of “effective technological protection measure” was a hybrid of access control and copy control measures as it had described those terms.  It expressed a preference for defining the expression “effective technological protection measure” simply by reference to copy control measures.

86                  This recommendation was acted upon, to the extent that the definition of “technological protection measure” in the Digital Agenda Bill 1999 was amended in the Copyright Amendment (Digital Agenda Bill) 2000 (Cth) (the “Digital Agenda Bill 2000”) to include the present par (b) (“through a copy control mechanism”).  The remainder of the definition remained largely unaltered, except for minor drafting changes and the removal of the word “effective” from the expression “effective technological protection measure”.

87                  The definition of “circumvention device” in the Digital Agenda Bill 2000 was not altered from that appearing in the Digital Agenda Bill 1999.  However, the reference to “an effective technological measure” in the body of the definition became anomalous, because that expression was no longer used elsewhere in the legislation.  The apparent anomaly will be removed if the Copyright Amendment (Parallel Imports) Bill 2002 becomes law (see [12] above).

88                  Neither Mr Bannon for the applicants nor Mr White for the ACCC suggested that the second reading speeches for the Digital Agenda Bill 1999 or the Revised Explanatory Memorandum for the Digital Agenda Bill 2000 were determinative in resolving the questions of construction presented in the present case.  Nonetheless, Mr White submitted that they were of some assistance to the ACCC’s argument.  It is appropriate, therefore, to refer to the more pertinent passages.

89                  The Attorney-General’s second reading speech for the Digital Agenda Bill 1999 stated (Cth Parl Deb, HR, 2 September 1999, at 9748-9749) that

“The reforms will update Australia’s copyright standards to meet the challenges posed by rapid developments in communications technology in particular the huge expansion of the Internet.  This extraordinary pace of development threatens the delicate balance which has existed between the rights of copyright owners and the rights of copyright users.  The central aim of the bill, therefore, is to ensure that copyright law continues to promote creative endeavour and, at the same time, allows reasonable access to copyright material in the digital environment.”

The Attorney-General pointed out (at 9749) that the reforms were consistent with the international standards set out in the WCT and WPPT and were largely based on the proposals in the Digital Agenda Discussion Paper.

One of the “central aims” was said to be (at 9750)

“to ensure that the technical processes which form the basis of the new technologies, such as the Internet, are not jeopardised”.

The enforcement measures proposed in response to the problems posed for copyright owners by new technologies included (at 9750-9751):

“the provision of criminal sanctions and civil remedies against persons who manufacture, deal in, import, distribute or make available online devices, or provide services, for the circumvention of technological protection measures designed to inhibit the infringement of copyright.  Examples of such measures include password protection or computer program locks.

…

The use of technological protection measures and RMI by copyright owners is likely to increase in the near future as systems for the online trading of copyright material are adopted. The government wants to ensure that such systems are protected by the law.  The…enforcement schemes described will provide copyright owners and licensees with a powerful weapon against the piracy of copyright material online.  The schemes will allow copyright owners to confidently establish new commercial market for copyright material in the knowledge that this legislation will offer them the tools to protect that material.”

The Revised Explanatory Memorandum for the Digital Agenda Bill 2000 stated that the proposed s 116A (at [184])

“provides copyright owners or licensees with civil actions (in accordance with s 116A(5)) against persons who make, deal in, import or make available online devices, or provide services, used to circumvent technological protection measures  designed to protect their copyright material.  The provision is extended to copyright owners’ licensees who may use technological protection measures to protect copyright material.  It will include situations where an owner of copyright material licenses a website proprietor to place his or her material on a website and the website proprietor uses a technological protection measure to protect the material.”

the accc’s submissions

90                  The ACCC submitted that the protection devices identified by the applicants could not be regarded as “technological protection measures” because they were not designed, in the ordinary course of their operation, to prevent or inhibit the infringement of copyright.  Mr White submitted that an “objective characterisation” of the Boot ROM, the access code or the combination of the two was required from their “basic nature”.  The evidence, so he argued, indicated that the protective devices did not discriminate between infringing copies and non-infringing copies (such as PlayStation games purchased overseas and imported into Australia for personal use or back up copies made pursuant to s 47C of the Copyright Act).  In the light of the “mixed evidence” as to the intended purpose and design of the Boot ROM and the access code, the proper conclusion was that the measures, in their ordinary course of operation were designed to act as regional access codes for the applicants’ products.

91                  The ACCC also argued that the devices could not be said to be designed to prevent or inhibit the infringement of copyright in a work or other subject matter merely because they deterred some people from unauthorised copying or importation of PlayStation games.  Mr White submitted that by the time a consumer inserted a CD-ROM into the PlayStation console he or she already had gained access to the computer program in the CD-ROM.  There was no infringement of the applicants’ copyright for a consumer to play infringing copies of the games on the PlayStation console.  A fortiori, it was not an infringement of copyright for a consumer to play a lawfully acquired copy, such as one acquired in the United States and brought back to Australia for personal use or a back-up copy made in accordance with s 47C of the Copyright Act.  In short, the PlayStation console could not be used to infringe copyright in the computer program in the PlayStation game.

92                  Mr White argued that the protective measures identified by the applicants merely prevented the consumer using copies of PlayStation games (which might or might not be unauthorised copies) in the PlayStation console. Use of a program, for example by inserting the CD-ROM into the console, was to be distinguished from access to the program in the sense of having the ability to copy the programs or carry out some other acts comprised in the copyright.  Running the computer program on the console did not involve an infringement of copyright.  Moreover, there was no evidence that the devices were “effective” in indirectly inhibiting infringing conduct in the manner suggested by the applicants.

93                  Mr White also submitted that the extrinsic materials, particularly the Attorney-General’s second reading speech, suggested that the intention of Parliament was to protect blocks on access to copyright material on the Internet, by prohibiting the use of circumvention devices to gain access to such material for the purpose of copying.  The intention was not to include mechanisms which prevent access to or the non-infringing use of material which has already been copied, whether lawfully or unlawfully.  Nor was it intended to protect devices which use access codes in the ordinary course of their operations to discriminate between a copyright owner’s products, depending on their geographic origin.

94                  It followed, so Mr White argued, that the definition of “technological protection measure” should be confined to a measure that ensures that access to the work or other subject matter which would enable infringement of copyright to occur is available solely by use of an access code or process or through a copy control mechanism.

95                  Finally, the ACCC disputed the alternative theory advanced by the applicants, namely that the protective device was designed to prevent or inhibit the infringement of copyright that would otherwise occur by reasons of a substantial portion of the computer program on the PlayStation game being reproduced in the console’s RAM.  Contrary to the applicants’ submissions, any reproduction of part of the program in the console’s RAM is not a reproduction “in a material form” for the purposes of s 31(1)(a)(i) of the Copyright Act, since there was no evidence that the computer program itself, or a substantial part of it, can be reproduced from the data temporarily stored in the RAM.  A computer program comprises the “set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result” (s 10(1)).  In the case of the PlayStation games, the program is not the audio, visual or caption content or data that the computer program is capable of causing to be reproduced on a television screen.  Thus the fact that the data stored in the RAM can be used, through the CPU-GPU-video RAM sequence, to reproduce the visual or caption content data does not mean that the computer program can be reproduced in a material form.  The definition of “material form in s 10(1) includes any form of storage from which the work, or a substantial part of the work, can be reproduced.  This was not the case here.

reasoning

The Work

96                  The applicants’ case under s 116A(1) of the Copyright Act commenced with the proposition that the relevant “work” was the computer program stored in the PlayStation game.  It was that work that was protected by the “technological protection measure”, namely the Boot ROM and access code.  According to Mr Bannon, the software for the PlayStation game is a “computer program” as that term is defined in s 10(1) of the Copyright Act: that is, it is a set of statements or instructions to be used directly or indirectly in a computer (the PlayStation console) to bring about a particular result.

97                  Subject to one qualification, I did not understand either Mr Stevens or Mr White (on behalf of the ACCC) to dispute this proposition.  The qualification is that in the course of oral argument there was some discussion as to whether the access code on the CD-ROM could be said to be part of the “computer program”.  It is not obvious to me how a negative answer to this question could materially alter the applicants’ case, provided that the computer program stored in the PlayStation game can be characterised as “a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result”.

98                  The legislative history of the definition of “computer program” has been traced by Emmett J in Australian Video Retailers Association Ltd v Warner Home Video Pty Ltd (2001) 53 IPR 242 (“AVRA v Warner”), at 256-258.  His Honour noted that the Revised Explanatory Memorandum for the Digital Agenda Bill 2000 stated that the new definition was intended to implement the recommendation made by the CLR Committee.  In its report, Computer Software Protection, the CLR Committee expressed the view that the definition of “computer program” should be consistent with the definitions adopted by Australia’s major trading partners and should be “clearly comprehensive in its coverage”.  The CLR Committee proposed the inclusion of the word “statements” in the definition to cover programs written in declarative programming languages: Computer Software Protection, at par 6.32.

99                  In AVRA v Warner, a case involving DVDs (as to which see [133] below), Emmett J took a broad approach to the current definition.  Nonetheless, his Honour held that copyright protection accorded to computer programs does not extend to the original content, such as a film, that the computer program can cause to be reproduced.  Protection is limited to the program instructions intended to bring about the particular consumer experience, in that case permitting the DVD player to navigate through the audio, visual and caption content of the DVD disk: at 259.  The “certain result” referred to in the definition of computer program was, in the circumstances of AVRA v Warner, playing and navigating through a cinematograph film or motion picture or other content of the DVD disk (at 256).

100               In the present case, notwithstanding the sketchy nature of the evidence, there would not seem to be any difficulty in concluding that the instructions incorporated in the programs stored in the Sony PlayStation games (as previously noted, Mr Nabarro referred to them as “the game code”) satisfy the statutory definition of “computer program”.  The program on the CD-ROM contains a set of instructions to be used in a computer (the Sony PlayStation console) in order to bring about a certain result, namely converting the original content of the CD-ROM into a form which enables the consumer to have the visual and aural experience of playing the game (see AVRA v Warner, at 256).

101               It is more difficult to regard the access code as a “computer program” or part of a “computer program”.  The majority in Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 recognised that the 127 bit “look-up table” in “Widget C”, although not of itself a set of instructions, could form part of the overall instructions comprised in Widget C.  But the encrypted sequence incorporated in a PlayStation game does not appear to be part of the program instructions that enable the consumer to have the visual and aural experience of playing the game.  In other words, the access code does not seem to be an integral part of the set of instructions stored in the CD-ROM.  Indeed, Mr Nabarro said in his evidence that “the part of the systems which is anti-piracy” is not of itself an instruction.

102               Mr Nabarro did, however, assert that the access code in the PlayStation game could be regarded as a “statement” for the purposes of the definition of “computer program”.  This assertion was apparently based on the proposition that without the correct access code, the “system” would not allow the console to load the program instructions.  Mr Nabarro presumably meant that the access code would be used indirectly in the console to bring about a certain result, namely enable the console to process the program instructions on the CD-ROM.  It is by no means clear that the current definition of “computer program”, in particular the word “statement”, is intended to encompass an encrypted sequence or string of characters merely because the sequence plays a part in permitting a computer to process a discrete set of instructions.  Since the point was not developed in argument, I prefer to say nothing more about it.

The Regional Access Code Issue

103               The applicants and the ACCC were at odds as to whether the relevant protective device (either or both of the Boot ROM and the access code) could be said to be “designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright” within the meaning of the definition of “technological protection measure” in s 10(1) of the Copyright Act.  The first disagreement concerned whether the device was designed for that purpose or for the purpose of limiting the consoles to the playing of PlayStation games with the “correct” regional access code.

104               Mr White suggested that a device could not be designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright unless this was its sole purpose or objective.  I do not think this is correct.  There is nothing in the language of the definition indicating that the device must be designed exclusively to prevent or inhibit the infringement of copyright.  Nor is there anything in the extrinsic materials to which I have referred that would suggest that the definition should be construed this way.  The fact that a device can be said to be designed to achieve two or more objectives, only one of which is to prevent or inhibit the infringement of copyright, does not seem to me, of itself, to take the device outside the definition of “technological protection measure”.  There may be a question as to whether a device that is designed primarily to achieve a particular non-copyright purpose by the specified means is within the definition simply because it can be said incidentally to prevent or inhibit the infringement of copyright.  I do not think, however, it necessary to address that question in the present case.

105               The construction in the previous paragraph receives some support from the reasoning of Jacob J in Sony Computer Entertainment v Owen [2002] EWHC 45 (ChD).  This was a case involving CDs or DVDs played on PlayStation 2 consoles.  One question was whether the circumventing chip at issue in that case, known as “Messiah”, was “specifically designed or adapted to circumvent the form of copy-protection employed” within the meaning of s 296(2) of the Copyright, Designs and Patents Act 1988 (UK).  Jacobs J held that Messiah was within s 296(2), notwithstanding that it had uses other than assisting copyright infringement, such as allowing certain non-infringing disks to be read by the PlayStation 2 console.  In his Lordship’s view, it was enough that Messiah in fact facilitated circumvention of the form of copy-protection employed by the applicant in that case.

106               The second disagreement between the applicants and the ACCC was whether it is enough to satisfy the definition of “technological protection measure” that the protective device has the practical effect of deterring or discouraging infringement of copyright.  I shall return to that question shortly.  If, however, the applicants are correct in their contention that the question should be answered affirmatively, it becomes necessary to consider whether the device does in fact have that practical effect.

107               The evidence bearing on this issue was sparse, partly because I did not permit the ACCC, as amicus curiae, to play the role of contradictor on evidentiary issues.  Mr Nabarro, however, gave uncontradicted evidence (which I accept) that Sony Japan designed the access code in PlayStation games in order “to protect its valuable intellectual property rights” in the games.  The evidence also established that the making and distribution of “pirate copies” of PlayStation games is and has been a major commercial problem for the applicants in Australia and, for that matter, elsewhere in the world.  I think it appropriate to infer that the protective device was intended by Sony Japan and, if it be relevant, Sony Europe and Sony Australia, to deter or otherwise discourage copyright infringement by the unlawful making, importation and distribution of copies of PlayStation games.  I also infer that the existence and use by the applicants of the protective device does have the practical effect of deterring or discouraging the infringement of copyright in these ways.  I appreciate that the evidence also suggests that there is a significant market for unauthorised copies of PlayStation games, such as the so-called “Bali silvers”, and for the “chipping” of consoles, but that does not justify concluding that the protective device is not effective in deterring or discouraging these activities, even if it does not eliminate them.

108               There is nothing in the evidence to suggest that the major purpose or objective of the protective device, from the applicants’ perspective, was to ensure that the PlayStation consoles could only play PlayStation games lawfully acquired in Australia or Europe.  It may be that if the topic had been explored, the evidence would have elucidated the applicants’ global marketing strategies and the role of the device in implementing those strategies.  But the topic was not explored.  Accordingly, I find on the evidence before me that the protective device was designed, in the ordinary course of its operation, to deter or discourage persons infringing the applicants’ copyright in the PlayStation games in the ways I have identified.  Whether that finding is enough to warrant concluding that the Boot ROM or access code constituted a “technological protection measure” within the meaning of the Copyright Act is another question.

Technological Protection Measure

The “Practical Effect” Argument

109               The applicants submitted that the definition of “technological protection measure” in s 10(1) of the Copyright Act should be read broadly, so as to include a device which had the practical effect of discouraging infringement or copyright.  Mr Bannon pointed out that the word “inhibit”, which is used in the definition, has a dictionary meaning of “to restrain, hinder, arrest or check” (Macquarie Dictionary).  Thus the statutory expression, “designed, in the ordinary course of is operation, to…inhibit the infringement of copyright in a work”, can be read as “designed, in the ordinary sense of its operation, to restrain, hinder or check the infringement of copyright in a work”.  Since (as I have found) the practical effect of the protective devices is to deter or discourage those who would otherwise make, import or trade in unauthorised copies of PlayStation games, it followed, so Mr Bannon argued, that the relevant device is a “technological protection measure”.

110               It will be recalled that Mr Bannon advanced two alternative arguments in support of the proposition that the protective devices relied on by the applicants are “technological protection measures” within the definition in s 10(1) of the Copyright Act.  If the second of these arguments is put to one side, Mr Bannon accepted, as I followed him, that a person who simply plays a “pirated” copy of a PlayStation game on a PlayStation console does not thereby infringe copyright in the game.  That is, he did not dispute the ACCC’s submission that any infringement of copyright in such a case (again leaving aside the alternative argument) predates the use of the pirated copy.  He also accepted that it is not an infringement of copyright for a person to play a lawfully acquired PlayStation game, such as one acquired in the United States, notwithstanding that the particular game lacks the regional access code allowing it to be played on a PlayStation console purchased in Australia. 

111               However, so Mr Bannon argued, it is not to the point that the protective devices, by their own processes or mechanisms, might not be capable of preventing a person infringing the applicants’ copyright in the PlayStation games (on the assumption that merely playing the game on a PlayStation console does not constitute an infringement of copyright).  He submitted that the definition of “technological protection measure” is satisfied so long as the protective devices, as a practical matter, remove or minimise the incentive for persons to copy PlayStation games as a prelude to playing the copies on the PlayStation console.  He contended that the protective devices do this by rendering infringing copies unsaleable unless the devices can be circumvented.

112               The starting point in addressing this argument, as always, must be the statutory language.  Section 116A(1)(a) of the Copyright Act provides that the section applies if a work or other subject matter is “protected by a technological protection measure”.  Clearly enough, the section is concerned with a measure that protects a work (or other subject matter).  Section 116A(1)(a) does not specify what it is the work is to be protected against.  To answer that question, it is necessary to go to the definition of “technological protection measure” in s 10(1) of the Copyright Act. 

113               The definition has a number of elements, as follows:

• a device or product, or a component incorporated into a process
• that is designed
• in the ordinary course of its operation
• to prevent or inhibit the infringement of copyright in a work
• by either or both of two particular means.

The two particular means of preventing or inhibiting the infringement of copyright are these:

• ensuring that access to the work is available solely by use of an access code or process with the authority of the owner or licensee; or
• a copy control mechanism.

114               It can be seen that the focus of the definition, as the expression “technological protection measure” itself implies, is on a technological device or product that is designed to bring about a specified result (preventing or inhibiting the infringement of copyright in a work) by particular means.  Each of the specified means involves a technological process or mechanism.  The means identified in sub-par (a) is an access code or process that must be used to gain access to the work.  The means identified in sub-par (b) is a “copy control mechanism”.  While the latter expression is not defined in the Copyright Act, the legislative history to which I have referred suggests that it is intended to encompass a mechanism that restricts the extent of copying of a work that otherwise could be undertaken by someone who has lawful access to that work.

115               The definition, so it seems to me, contemplates that but for the operation of the device or product, there would be no technological or perhaps mechanical barrier to a person gaining access to the copyright work, or making copies of the work after access has been gained, thereby putting himself or herself in a position to infringe copyright in the work.  The definition is intended to be confined to devices or products that utilise technological processes or mechanisms to prevent or curtail specific actions in relation to a work, which actions would otherwise infringe or facilitate infringement of copyright in that work.  In other words, a “technological protection measure”, as defined, must be a device or product which utilises technological means to deny a person access to a copyright work, or which limits a person’s capacity to make copies of a work to which access has been gained, and thereby “physically” prevents or inhibits the person from undertaking acts which, if carried out, would or might infringe copyright in the work.  It is in this sense that the device or product must be designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work.  I do not think the definition is concerned with devices or products that do not, by their operations, prevent or curtail specific acts infringing or facilitating the infringement of copyright in a work, but merely have a general deterrent or discouraging effect on those who might be contemplating infringing copyright in a class of works, for example by making unlawful copies of a CD-ROM.

116               I appreciate that it is a general principle of statutory construction that all words in a section must be given some meaning and effect: D C Pearce and R S Geddes, Statutory Interpretation in Australia (5^th ed 2001), at par 2.22 and cases cited there.  However, I think the construction I have adopted gives the word “inhibit” in the definition work to do.  There may be devices which are not necessarily designed, in the ordinary course of their operation, to prevent the infringement of copyright, but to inhibit such infringement.  A copy control mechanism, for example, might not prevent all copying that infringes copyright, but might limit the extent of unlawful copying that can take place, for example by reducing the quality of copies that can be made of the copyright work.  Such a device could properly be said to be designed, in the ordinary course of its operation, to “inhibit” the infringement of copyright in a work, rather than to prevent such infringement.  It may be that access to only part of a work is restricted by a process requiring decryption or unscrambling.  In this situation, too, it might be more appropriate to say that the process is designed to inhibit rather than prevent the infringement of copyright in the work.

117               The legislative history of s 116A and of the definition of “technological protection measure” is not conclusive on the question of construction.  It is, however, consistent with the interpretation I have adopted.  From at least the 1997 Digital Agenda Discussion Paper, the emphasis has been on penalising or discouraging the commercial distribution of devices for circumventing “locks” or protective devices which deny unauthorised access to materials stored in electronic form, including Internet sites, or which prevent unauthorised copying of such materials.  The EC Directive, which has proved influential in the drafting of the current legislation, was intended to provide legal protection against commercial activities facilitating the circumvention of specific technological measures such as those requiring a code for a user wishing to gain access to the work.  This emphasis suggests that what the drafter of s 116A (and its accompanying definitions) had in mind was to provide legal protection to devices that use technological or mechanical means to thwart acts which, if committed, would infringe copyright in the work.  There seems to be nothing in the legislative history to support the view that a technological measure is to receive legal protection from circumvention devices if the only way in which the measure prevents or inhibits the infringement of copyright is by discouraging infringements of copyright which predate the attempt to gain access to the work or to copy it.

118               It follows that the protective devices relied on by the applicants cannot be regarded as technological protection measures if the only way in which they inhibit infringement of copyright in PlayStation games is by discouraging people from copying these games as a prelude to playing them on PlayStation consoles.  It is necessary for the applicants to demonstrate that the protective devices are designed to function, by their own processes or mechanisms, to prevent or hinder acts that might otherwise constitute an infringement of copyright.

The Reproduction in RAM Argument

119               The applicants’ alternative argument was that the protection devices prevent a user of an infringing PlayStation game from reproducing a substantial part of the game’s computer program in the console’s RAM.  The central question to which this argument gives rise is whether the temporary storage of part of a computer program in the RAM of a computer (in this case, the PlayStation console) can be said to constitute reproduction of a substantial part of the computer program “in a material form” and thus infringe copyright in the computer program (Copyright Act, ss 31(1)(a)(i)), 36(1)).

120               This issue is of considerable importance and has generated much debate partly because of the potential ramifications for users of the Internet.  Web browsers function by downloading material from a site into the RAM on the user’s computer, thus permitting the material to be displayed on the screen: see J D Carothers, “Protection of Intellectual Property on the World Wide Web: Is the Digital Millennium Copyright Act Sufficient?” (1999) 41 Arizona L Rev 937, at 941.  The storage in the RAM is temporary, as it is in the present case, in the sense that when the computer is turned off, the contents of the RAM are lost.  Although Mr Nabarro did not use the term, this characteristic of the RAM is known as “volatility”: see AVRA v Warner, at 250, per Emmett J.

121               In the United States, in a rather different statutory context, it has been held that the loading of computer software into the RAM constitutes the making of a “copy” for the purposes of the Copyright Act, 17 USC § 101: MAI Systems Corporation v Peak Computer Inc 991 F2d 511 (9^th Cir 1993).  The principle has been applied, among other situations, to browsing on the Internet: Intellectual Reserve, Inc v Utah Lighthouse Ministry, Inc 75 F Supp 2d 1290 (D Utah 2000).  The debate has centred on whether the holding in MAI v Peak carries copyright protection for computer programs too far: see D Nimmer, “Brains and Other Paraphernalia of the Digital Age” (1996) 10 Harv J of Law & Technology 1, at 21 ff; G M Hoffmann, “Arguments for the Need for Statutory Solutions to the Copyright Problem Presented by RAM Copies Made During Web Browsing” (2000) 9 Texas Int Prop LJ 97. 

122               In the absence of full argument in the present case, it is not feasible to explore all the issues to which the applicants’ argument gives rise.  It is, however, necessary to address the argument.

Substantial Part

123               The first hurdle the applicants must overcome is that they must show that a substantial part of the PlayStation game’s computer program is copied into the console’s RAM when the CD-ROM in which the program is stored is inserted into the console.  I have already summarised the somewhat sketchy evidence bearing on this question (see [49]-[52], above).

124               The phrase “substantial part”, as used in s 14(1)(b) of the Copyright Act, refers to the quality of what is taken, rather than the quantity: Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, at 293, per Lord Pearce; Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1, at 32, per Gleeson CJ, McHugh, Gummow and Hayne JJ.  In determining whether something is a reproduction of a substantial part of a computer program, the

“essential or material features of [the program] should be ascertained by considering the originality of the part taken”:

Data Access v Powerflex, at 33, approving the language of Mason CJ in Autodesk v Dyason (No 2), at 305.  Of course copyright in a literary work only subsists if the work is “original”: Copyright Act, s 32(1); Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd [2002] FCAFC 112.

125               In this case, only a very small proportion of the PlayStation game’s computer program is stored in the console’s RAM at any given time.  I think, however, that the better view, on the rather patchy evidence, is that what is stored in the RAM has the quality of originality, since it allows the game to be played, albeit at one level only.  In other words, the instructions stored in the RAM ordinarily incorporate some elements of the game that give it originality.  On the test approved by the High Court in Data Access v Powerflex, therefore, the applicants have shown that a substantial part of the computer program would be temporarily stored in the PlayStation console’s RAM if any of the PlayStation games had been played on the console.  The storage is temporary, because the contents of the RAM would be lost if power to the console were to be disconnected and, in any event, are displaced as new instructions are downloaded to the RAM.

The Australian Cases

126               The question of whether the copying of a computer program into the RAM constitutes a reproduction, or reproduction of the program in a material form, has been considered in three Australian cases.  The first is the decision of the Full Court in Dyason v Autodesk Inc (1989) 24 FCR 147 (reversed on other grounds in Autodesk Inc v Dyason (No 1) (1991) 173 CLR 330).  There it was argued that a person who used the AutoCAD program (designed for the drafting of architectural plans) with the allegedly infringing AutoKey lock, rather than the AutoCAD lock, was necessarily infringing copyright in the AutoCAD program.  Sheppard J recorded part of counsel’s argument as follows (at 176):

“Counsel said that, in order for AutoCAD to be run, it must necessarily be reproduced in the RAM (Random Access Memory) of a computer.  Counsel said that a RAM was a form of storage from which the computer program could be reproduced.  It followed that reproduction in the random access memory of the computer was necessarily reproduction in a material form.”

His Honour dealt with the argument this way (at 177-178):

“I have…serious misgivings whether it is appropriate to say that the transfer of the program to the random access memory itself constitutes either a reproduction or an adaptation.  I have less difficulty with the notion that the transfer of the program from a floppy disk to a hard disk within the computer is a reproduction or adaptation.  In my view it is.  I think that it may be inferred from the evidence that some users of AutoCAD would transfer the program to hard disks in their computers.  Counsel for Autodesk also submitted that the display on a screen connected to the computer of information contained within the program was, if not the reproduction, then an adaptation of a substantial part of what was contained within the program.  The same submission was made in respect of printouts of parts of the information contained within the program obtained from a printer attached to the computer.

Counsel for the appellants submitted that the position should be likened to what occurs upon the sale of a book in which there is copyright.  No reproduction occurs when the purchaser of the book reads the book.  Nor is there any reproduction if the book is lent to someone else who also reads it.  The analogy is, I think, helpful, but ought not be taken too far.  The very nature of a computer program cautions one against taking too much from it.  Nothing needs to be done in relation to the book except to turn the pages.  On the other hand, the computer program cannot be used for its intended purpose unless the program is run in a computer.  But both the transfer of a program from a floppy disk to the random access memory of the computer and the display or printout of a version of part of the program on a screen or printout are essential incidents of the proper and accepted use of the program.  They are just as essential as the ability of the purchaser of a book to turn its pages in order to read them.  But the transfer of a program to a hard disk within the computer in which it is permanently stored is more akin to making a copy of a book if one wishes to pursue the analogy.  I should add that I see no difference between an act of that kind and the copying of the program on to additional floppy disks.

It follows from what I have said that, in my opinion, there is established the fact that some purchasers of AutoCAD would make reproductions or adaptations of the computer program in the course of their ordinary use of it.  These would be those purchasers who cause it to be fixed permanently on to hard disks within their computers.”

127               It will be seen that Sheppard J seems to have analysed the argument on the assumption, as stated by counsel, that the RAM in that case was a form of storage from which the computer program could be reproduced.  As I have found, that is not the effect of the evidence in the present case.  Sheppard J, acting on the assumption I have identified, was nonetheless doubtful as to whether the transfer of the program to the computer’s RAM was a reproduction or adaptation of the program.  His Honour’s doubts appear to have arisen because the program transferred to the RAM (as distinct from the program transferred to the computer’s hard disk drive) was stored there temporarily (that is, only while the computer was switched on).  He was not concerned with whether the program transferred to RAM could be said to have been reproduced in a “material form”.

128               Beaumont J noted (at 201) that there was “force” in the appellants’ submission that loading a program into RAM in order to run it does not constitute a “reproduction” of the program “in material form”.  The proposition that he thought had force was that

“running a program is analogous to reading a book or hearing a musical work…[I]t is the very use intended to be made of the work”.

His Honour did not consider it necessary to decide the point.

129               The third member of the Court, Lockhart J, left open the question whether the operation of the AutoCAD program in a computer resulted in there coming into existence a reproduction or adaptation of the program within the RAM.  On appeal, the High Court did not consider this question: cf Autodesk v Dyason (No 1), at 346-347, where Dawson J, with whom the other members of the Court agreed, applied the definition of “material form” in s 10(1) of the Copyright Act to conclude that the AutoKey lock had reproduced a substantial part of the AutoCAD program in a material form.

130               It perhaps should be noted that the United States authorities have held that temporary storage of software in RAM is “fixed” for the purposes of the relevant definitions in the Copyright Act (US).  The Copyright Act (17 USC § 101) defines “copies” as

“material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.  The term ‘copies’ includes the material object, other than a phonorecord, in which the work is first fixed.”

The Act explains that a

“work is ‘fixed’ in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration…”. (Emphasis added.)

In MAI Systems v Peak, the Court of Appeals for the Ninth Circuit held (at 518) that the operating system loaded into the RAM in that case was

“sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration”.

It will be seen, however, that the statutory language in the United States is different from that used in the Copyright Act.

131               The second Australian case addressing the issue is Microsoft Corporation v Business Boost Pty Ltd (2000) 49 IPR 573.  In that case, Microsoft alleged that Business Boost had infringed copyright by wrongfully authorising unlicensed reproductions of Microsoft programs in the hard disk drives of computer systems and in electronic chips comprising the RAM of computer systems.  The claim was undefended.  Tamberlin J identified the question as whether reproduction of information and instructions in the hard drive of a computer and in the RAM amounts to copyright infringement.

132               His Honour found, on the evidence, that the loading of computer programs into a hard disk is a form of storage from which a copyright work or adaptation can be reproduced.  For that reason he held (at 576) that “unauthorised copying of computer programs onto a hard disk does amount to copyright infringement”.  His Honour dealt with the question of the RAM as follows (at 576):

“In relation to RAM, it is possible for a computer program to remain stored in RAM indefinitely until the computer system is shut down or otherwise powered down.  Accordingly, in my opinion, it follows from this evidence that the period of time during \which the instructions or data are stored in RAM can be substantial.  For example, it is not infrequently the case that computers are left on for a considerable period of time with one or more programs running.  The RAM storage continues over this period.  The fact that that memory is vacated when power is extinguished does not necessarily mean that there has not been a substantial period of storage of the instructions and data comprised in the RAM memory.

It is to be noted that the definition of ‘material form’ in the Act makes no reference to the duration of the storage and is consistent with storage being either for a short or long period.  The crucial concept is ‘storage’.  The present case is one where I consider regard can be had to the explanatory memorandum directed to the Copyright Amendment Bill 1984 introducing the present definition.  That relevantly reads:

28.     The definition of ‘material form’ is new and makes it clear that the material form includes such methods as storage or reproduction on magnetic tape, read only or random access computer memory, magnetic or laser disks, bubble memories and other forms of storage which will doubtless be developed [emphasis added].

It is evident from this that the definition was intended to be far-reaching and to cover not only ROM and RAM but also other types of storage to be developed in the future.” (Emphasis in original.)

His Honour thought that support for this conclusion could be obtained from the United States authorities, particularly MAI Systems v Peak.

133               Tamberlin J did not state specifically whether he considered that the definition of “material form” was satisfied because the copyright work could be reproduced from the data stored on the RAM, or for some other reason.  His Honour may have taken the view that the evidence supported the former proposition.  If so, Microsoft v Business Boost is distinguishable from the present case.  If his Honour did not form that view, it is not clear why he regarded the transfer of data in electronic form to the RAM as a reproduction of the data in a material form.

134               In the third case, AVRA v Warner, an issue arose as to whether the copying on to the RAM of a DVD player of a substantial part of the program instructions on a DVD involved the reproduction of a computer program in a material form.  (“DVD” was apparently once an acronym of “digital video disk”.  It refers to a system whereby material, both video and audio, is stored on a disc in digital form and is capable of being retrieved by a device such that the material can be converted into moving images on a screen accompanied by sound: see AVRA v Warner, at 243).

135               Emmett J cited Microsoft v Business Boost for the proposition that the definition of “material form” in s 10(1) of the Copyright Act was intended to be “far-reaching and to cover not only ROM and RAM but other types of storage to be developed in the future”.  He held, however, (at 262-263) that there had been no reproduction of the computer program in a material form:

“The contents of computer programs stored in the RAM of a DVD player or personal computer during the playing of a moving picture or cinematograph film are volatile….  On the other hand, the content of the ROM is different from the content of RAM in that the former is not volatile.  The content of ROM is not lost when power is removed.

The definition inserted in 1984 makes clear that ‘material form’ includes a form of storage that is not visible, such as ROM and RAM.  Whether or not there will be a reproduction of a computer program in a material form, as that concept is extended by the definition, will depend upon the particular circumstances.  As I have found…, ordinarily it will not be possible to reproduce the contents of RAM in a DVD player.  If a DVD player has been modified, such that it is possible to study or use the RAM for the purpose of reproducing its contents, there could be a reproduction of the computer program in a material form within the meaning of s 31(1)(a)(i) of the Act.  However, in the ordinary course, temporary storage of a substantial part of the computer program in the RAM of a DVD player will not involve a reproduction of the computer program in a material form.

Where a DVD disc is being played by means of a personal computer, it will be possible, where an appropriate additional program is installed in the personal computer, to reproduce the contents of RAM.  However, where a computer does not have such a program installed, the use of the computer for the purpose of playing a DVD disc will not involve the reproduction of the computer programs in question in a material form within the meaning of s 31(1)(a)(i) of the Act.” (Emphasis in original.)

136               On the basis of this analysis, Emmett J answered a separate question that had been formulated pursuant to FCR, O 29 r 2, as follows:

“[Q]  Does a person who plays the Romeo Must Die DVD Disc or the Bait DVD Disc on either a DVD player or a personal computer reproduce in a material form, the whole or a substantial part of the computer programs referred to in the answer to question 2?

…

[A]  A person who plays the Romeo Must Die DVD disc or the Bait DVD on either a DVD player or a personal computer does not ordinarily reproduce in a material form the whole or a substantial part of the computer programs referred to in the answer to question 2.

137               It seems to me that the reasoning of Emmett J is precisely in point in relation to the present case.  His Honour proceeded on the basis that the definition of “material form” in s 10(1) of the Copyright Act cannot be satisfied unless the copyright work (the computer program), or a substantial part of it, can be reproduced from the data temporarily stored in the computer’s RAM.  In the case of a DVD player or the PlayStation console, this means that it must be possible to reproduce the computer program, or a substantial part of it, from the data stored in the RAM of the DVD player or of the PlayStation console.  In the present case, subject to an argument I address next, that requirement is not satisfied.  If there was nothing further on this aspect of the case, I would follow AVRA v Warner.  While this is a novel area raising difficult issues, I could not characterise the reasoning as “plainly wrong”: cf Bank of Western Australia Ltd v Commissioner of Taxation (1994) 55 FCR 233, at 255, per Lindgren J.

Transmission of Data to the GPU

138               I should add that in one of the many variations on his argument, based on evidence introduced late in the case, Mr Bannon submitted that the data stored in the RAM was reproduced at the gateway to the GPU.  The evidence on this issue was not satisfactory.  Mr Nabarro’s evidence was framed in terms of the statutory language, but with little explanation to support the assertions.

139               Mr Nabarro did not say, in terms, that the part of the computer program stored in the RAM (or some other part) was reproduced at the gateway to the GPU.  In his third affidavit, he said this:

“4.       If and when the player operates the game controller, the program information stored in RAM is called on and extracted from RAM on instructions of the CPU of the console and the CPU, GPU and video RAM, using instructions from the copy of the game stored in the console’s RAM in conjunction with the instructions conveyed to it by the player’s operation of the game controller via the sub bus serial communications interface to the CPU, causes the various scenarios and outcomes to be displayed on the television screen.

5.         For the purpose of undertaking that task, the electronic copy of the video portion of the game stored in the console’s RAM is reproduced, particularly in the video RAM.  It would thus be correct to say of the code stored in the RAM that it ‘can be reproduced’, and, indeed, is reproduced, particularly to the GPU and the video RAM.”

It will be seen that in par 5, Mr Nabarro asserts that the electronic copy of the video portion of the game is reproduced, particularly in the video RAM.  It is, he says, “thus” correct to say that of the code stored in the RAM that it can be reproduced to the GPU.

140               It is by no means clear what Mr Nabarro meant by the word “reproduced”, especially as the evidence did not establish that what is received by the video RAM system comprises portion of the computer program originally stored in the CD-ROM.  Mr Nabarro apparently assumed that what was transmitted to the GPU could be regarded as a “reproduction” even though there was no evidence that it was stored for any discernible period of time.  Indeed Mr Bannon acknowledged in argument that any “reproduction” in this sense would not last for more than perhaps one hundred thousandth of a second.

141               Nor did Mr Nabarro’s evidence explain the precise relationship between that portion of the computer program stored in the RAM and the data which was transmitted to the “gateway” to the GPU.  He did not specify what proportion of the data stored in the RAM was transmitted to the gateway over any given period of time.  Section 10(1) of the Copyright Act defines “material form” to include any form of storage (as in the RAM) from which the work or a substantial part of the work can be reproduced.  Mr Nabarro did not explain what portion of the computer program would find its way to the “gateway” of the GPU in the absence of some kind of storage.  Moreover, Mr Nabarro agreed in evidence that the contents of the RAM could not immediately be extracted “by one means”.

142               In this state of the evidence the applicants have not satisfied me that a substantial part of the computer program can be said to have been reproduced at the gateway to the GPU.  The Court should not be left in a position where it has to guess as to the operation of technological processes and how those processes might satisfy the statutory language.  In my opinion, the applicants’ argument that the definition of “material form” is satisfied in the present case by the transmission of data to the gateway of the GPU is not made out on the evidence.

Was the Computer Program Reproduced in the RAM in a Material Form?

143               Mr Bannon perceived the difficulty presented by the reasoning in AVRA v Warner.  He sought to overcome it by relying upon an argument that appears not to have been put to Emmett J.  Mr Bannon pointed out that the definition of “material form” in s 10(1) of the Copyright Act is inclusive and not exhaustive.  He submitted that the expanded definition was intended to deal with the problem that arose in Computer Edge Pty Ltd v Apple Computer Inc (1986) 161 CLR 171, where the majority of the High Court held that the electrical impulses stored in a ROM or EPROM did not reproduce a program written in source code because the former had not the slightest resemblance to the latter: at 186, per Gibbs CJ.  The expanded definition dealt with this problem by ensuring, for example, that the recording in digital form of a typewritten literary work would be regarded as a reproduction of that work in a material form, notwithstanding that the digital form would bear no resemblance to the typewritten work.

144               Mr Bannon submitted that there was no occasion to rely upon the expanded definition of “material form” if the data stored in the console’s RAM could be said, as a matter of ordinary language, to reproduce in a material form the computer program stored in a PlayStation game.  He pointed out that the definition of “computer program” introduced into the Copyright Act by the Digital Agenda Act refers to

“a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.” (Emphasis added.)

In the vast majority of cases, so he argued, a set of statements or instructions would take the form of electronic impulses or be produced in some other machine readable form.  Mr Bannon also pointed out that the Digital Agenda Act introduced s 21(1A) of the Copyright Act, in the following terms:

“For the purposes of this Act, a work is taken to have been reproduced if it is converted into or from a digital or other electronic machine-readable form, and any article embodying the work in such a form is taken to be a reproduction of the work”.  (Emphasis added.)

145               These provisions, so Mr Bannon argued, indicate that the Copyright Act, in its present form, recognises and protects works that are produced entirely in digital or electronic machine-readable form.  It follows that the “material form” in which such works can be said to be reproduced include similar digital or electronic machine-readable formats.  Mr Bannon submitted that it could not seriously be doubted that the loading into the RAM of a work that is already in an electronic machine-readable form amounts to a reproduction in a “material form” within the ordinary meaning of those words.  He supported this argument by reference to s 47B(1) of the Copyright Act.  He argued that this provision, which states that copyright in a computer program is not infringed by the making of another program in certain circumstances, would be unnecessary unless the Copyright Act contemplated that the normal use of a computer program, involving it being reproduced in the RAM of a computer, infringes copyright.

146               While this argument has some attractions, I think it pays too little attention to the significance of the words “in a material form” as used in s 31(1)(a)(i) of the Copyright Act.  The primary meaning of “material”, according to the Shorter Oxford English Dictionary, is

“Of, or pertaining to matter or substance; formed or consisted of matter; corporeal”.

In turn, the primary definition of “matter” is

“The substance or the substances collectively of which a physical object consists”.

147               It may well be that the reservations expressed by Sheppard and Beaumont JJ in Dyason v Autodesk Inc can be overcome and that copying or transferring a computer program into the RAM of a computer can be said to “reproduce” the program.  But it is difficult to say that the program has been reproduced “in a material form”, given that what is stored in the RAM is essentially electronic impulses.  In other words, the material stored in the RAM is incorporeal in character.  It does not seem to me an ordinary or customary use of language to say that the transfer of part of a computer program from a CD-ROM into the RAM of a computer is the reproduction of the program in a “material form”.  Indeed that strikes me as a very curious use of language.

148               On the face of things, it might seem surprising that the reproduction in electronic or digital form of a computer program is not necessarily an infringement of copyright in the computer program.  The scheme of the legislation, however, seems to be that reproducing a work in electronic or digital form infringes copyright, pursuant to ss 31(1)(a)(i) and 36(1) of the Copyright Act, only if the form in which the work is reproduced is itself capable of further reproduction.  This approach is consistent with s 21(1A) of the Copyright Act, upon which Mr Bannon relied.  Section 21(1A) provides that a work that is converted into or from a digital or other electronic machine readable form is “taken to have been reproduced”.  It does not say that the work is taken to have been reproduced in a material form.  Whether the reproduction is in a material form involves a further inquiry.  Similarly, there is nothing in s 47B(1) of the Copyright Act which is inconsistent with this approach.  That provision has work to do once it is recognised that some, if not all, electronic or digital reproductions of a computer program will infringe copyright in that program.

149               It is plausible that the legislation is structured in this way as a means of balancing the interests of copyright owners and users.  If a work such as a computer program is reproduced in electronic or digital form, but is not amenable to further reproduction, it might well be thought too restrictive to regard the first reproduction in electronic or digital form as necessarily an infringement of copyright.  This seems to have been the view of the CLR Committee, in its Report on Computer Software Protection.  The CLR Committee recommended against making any change to the definition of “material form” in s 10(1) of the Copyright Act.  It noted that the definition is inclusive.  It said that

“‘material form’ should be construed as meaning not only something of corporeal form, composed of matter, but as including those forms of storage where a work or an adaptation of a work exists in a form that would not normally be regarded as material, such as electronic and magnetic forms of storage, but which are amenable to reproduction”. (Emphasis in original.)

This passage suggests that the CLR Committee was prepared to adopt a broad view of the expression “material form”, but subject to the qualification conveyed by the concluding words.  Those words seem to reflect a view that reproduction of a work in an electronic or magnetic form of storage should constitute an infringement of copyright only if the form of storage is itself amenable to further reproduction.

150               This approach to the construction of the expression “in a material form” requires a distinction to be drawn between the use of a computer program in circumstances where further reproduction of a program (that is, otherwise than in the computer’s RAM) is not possible and its use where further reproduction of the program can occur.  Mr Bannon submitted that it would be absurd if infringement of copyright depended upon whether or not an electronic game is played on a computer which has a software package that enables the contents of the RAM to be reproduced.  It is, however, by no means obvious to me that this state of affairs is absurd.  If the legislation is not intended to render unlawful the mere use of a computer program, even one that is copied, but is intended to regard further copying of the program as an infringement, it may make sense to distinguish between use of the program in circumstances where it can be reproduced and in circumstances where it cannot.  Commercial considerations aside, there is presumably nothing to prevent the applicants designing the PlayStation console and its software so that the portion of the program stored in the console’s RAM can be reproduced (with or without the encrypted access code).  If it did so, there would seem to be little doubt that the protection device would be capable of being a “technological protection measure” as defined in s 10(1) of the Copyright Act.

The Cinematograph Film Argument

151               The applicants’ penultimate fall-back argument was that each PlayStation game embodies a cinematograph film and that a substantial part of the film is reproduced in the RAM, thereby making a copy of the film.  The instructions stored in the RAM, with the aid of the CPU and the GPU in the PlayStation console, then reproduce the sounds and visual images on the screen.  According to Mr Bannon, the embodiment of a substantial part of the cinematograph film amounts to the making of a “copy” of the film.  Thus the protective devices prevent a copy of the film being made in the RAM.  If it is necessary for the protective devices to prevent a further copy being made, they prevent visual images being reproduced from the instructions contained in the RAM.

152               Perhaps because this argument was introduced at a very late stage, the evidence to support it was very sketchy.  I had, for example, very little technical evidence of the kind that was adduced in Galaxy Electronics Pty Ltd v Sega Enterprises Ltd (1997) 75 FCR 81 (affirming Sega Enterprises Ltd v Galaxy Electronics Pty Ltd (1996) 96 FCR 268), on which Mr Bannon relied.  This is not a particularly satisfactory state of affairs.

153               The following material reproduces or summarises the principal provisions of the Copyright Act relating to this argument:

“cinematograph film means the aggregate of the visual images embodied in an article or thing so as to be capable by the use of that article or thing:

(a)               of being shown as a moving picture; or

(b)               of being embodied in another article or thing by the use of which it can be so shown;

and includes the aggregate of the sounds embodied in a sound-track associated with such visual images” (s 10(1)).

“copy, in relation to a cinematograph film, means any article or thing in which the visual images or sounds comprising the film are embodied” (s 10(1)).

“For the purposes of this Act, sounds or visual images shall be taken to have been embodied in an article or thing if the article or thing has been so treated in relation to those sounds or visual images that those sounds or visual images are capable, with or without the aid of some other device, of being reproduced from the article or thing” (s 24).

154               The maker of a cinematograph film is the owner of any copyright subsisting in the film by virtue of Part IV of the Copyright Act: s 98(2).  Section 131 provides as follows:

“Where the name of a person appeared on copies of a cinematograph film as made available to the public in such a way as to imply that the person was the maker of the film…that person shall, in an action brought by virtue of this Part, be presumed, unless the contrary is established, to be the maker of the film…”.

155               Section 86(a) provides that for the purposes of the Copyright Act, copyright, in relation to a cinematograph film, is the exclusive right to

“do all or any of the following acts:

(a)             to make a copy of the film…”.

Section 21(6) states that a cinematograph film is taken to have been copied if it is converted into or from a digital or other electronic machine-readable form, and any article embodying the recording or film in such a form is taken to be a copy of the recording or the film.

156               In Galaxy Electronics v Sega Enterprises, a case involving computer video games, the Full Court held that the word “embodied” in the definition of “cinematograph film” and in s 24 should be given a broad meaning.  Accordingly, as Wilcox J (with whom Lockhart and Lindgren JJ agreed) said (at 20):

“[t]he visual images that constitute the moving picture are taken to have been ‘embodied’ in the computer program because the computer program was so treated in relation to those images as to be capable of reproducing them”.

Thus the aggregate of the visual images generated by the playing of the computer games constituted a cinematograph film.  It did not matter that the images were embodied in a different form, described as “three-dimension vertices of the polygon model” (at 18, per Wilcox J).

157               I am prepared to assume that the reasoning in Galaxy Electronics v Sega Enterprises applies to the PlayStation games, although I am not entirely sure that the evidence, as distinct from commonsense and intuition, establishes the factual basis for this conclusion.

158               It seems to me that the major obstacle in the applicants’ path, on this aspect of the case, is to show that the data reproduced in the RAM of the PlayStation console constitutes a copy of a substantial part of the “aggregate of visual images” constituting the cinematograph film.  A similar issue arose in AVRA v Warner, where Warner contended that the

“means by which the DVD disc is played, which includes the sequential decompression of the audio, video and caption content and storage in RAM, constitutes a copying of the content”.

Emmett J rejected the argument (at 254-255):

“Does a person who plays the Bait DVD Disc or the Romeo Must Die DVD Disc make a copy of the whole or a substantial part of the embodied cinematograph film in the course of playing the respective disc on either a DVD player or a personal computer?

…

62. Warner's contention raises the question of whether audio, video and caption content stored in RAM is capable of being reproduced. The storage of the motion picture is volatile in the sense that it is lost if the DVD player is switched off. In the ordinary course, a DVD player will be configured such that the whole of the contents of its RAM will be volatile. It will not be possible to reproduce its contents. In such a case, the temporary storage of the motion picture in the RAM of a DVD player will not involve a reproduction of the computer program in a material form. On the other hand, a DVD player could be modified such that it would be possible to study or use the RAM for the purpose of reproducing its contents. In that case there could be a reproduction of sounds and images.

63 The statutory scheme…requires that it be possible to identify, at the time of the act referred to in s 86(a), an article or thing in which the cinematograph film or motion picture, namely the visual images or sounds comprising it, is embodied. It is not sufficient that the visual images and sounds comprising the cinematograph film or motion picture have at some time been embodied in the article or thing. There must be a point at which an article or thing can be identified in which the visual images and sounds are embodied.

64 Section 14(1) provides that a reference to the doing of an act in relation to a work or other subject-matter, including making a copy of a cinematograph film, is to be read as including a reference to the doing of the act in relation to a substantial part of the work or subject-matter. The phrase ‘substantial part’ refers to the quality of what is taken, rather than the quantity - Autodesk Inc v Dyason [No.2] (1993) 176 CLR 300 at 305. However, an inquiry should also take into account the purpose of the copying - Nationwide News v Copyright Agency Limited (1996) 65 FCR 399 at 418-419. It is common ground that, in the case of the storage in RAM of the audio, video and caption content of a DVD, only a tiny fraction of the motion picture is stored at any one time. The purpose of the storage is to display the motion picture. The storage is volatile.

65 I consider that the ephemeral embodiment of tiny fractions of the visual images and sounds that comprise a cinematograph film or motion picture sequentially does not constitute the act of making a copy of the motion picture or cinematograph film within the meaning of s 86(a). It is clear that neither the whole nor any substantial part of a cinematograph film or motion picture is ever embodied in the RAM of a DVD player or personal computer at any given time. The mere fact that, over a period of time, being the time taken to play the motion picture or cinematograph film, tiny parts are sequentially stored in the RAM of the DVD player or personal computer does not mean that the motion picture or cinematograph film is embodied in such a device. As a result, a consumer, by playing a DVD disc, does not, for the purposes of the Act, make a copy of the whole or a substantial part of the motion picture or cinematograph film embodied in that DVD disc.”

159               The present case is not identical to AVRA v Warner, because the film in this case does not simply comprise audio, video and caption content intended to be viewed sequentially.  The PlayStation games are interactive, in much the same way as the video games in Galaxy Electronics v Sega Enterprises.  As I have already noted, the evidence bearing on this issue was incomplete.  Nonetheless, the evidence suggests that only a very small proportion of the images and sounds comprising the cinematograph film are “embodied” in the PlayStation console’s RAM at any given time.  Moreover, as Emmett J observed in AVRA v Warner, the purpose of the storage in the RAM is to display the images and to allow the game to be played.

160               As I have explained, the question of substantiality in relation to the reproduction of a computer program is to be assessed by reference to the “originality” of that which is taken.  The same approach cannot be taken to the copying of a cinematograph film, since originality is not a condition for the subsistence of copyright pursuant to Part IV of the Copyright Act.  The question is rather the quality of what is reproduced.  In the absence of clearer and more detailed evidence as to the nature and quality of the images embodied in the instructions stored in the RAM, assessed in relation to the totality of “the aggregate of visual images” constituting the cinematograph film, I cannot conclude (to adopt the language of Emmett J) that “the ephemeral embodiment” of a small proportion of images in the RAM constitutes the act of making a copy of the cinematograph film for the purposes of s 86(a) of the Copyright Act.

161               In my opinion, on the evidence before me, the argument founded on s 86(a) of the Copyright Act must be rejected.

A Further Fallback Argument

162               In the applicants’ written submissions prepared in response to the ACCC’s written outline, they introduced a “further alternative way of looking at the ‘technological protection measure’ question”.  This was

“to treat the access code embodied in each Playstation game as a technological protection measure on its own.  As such it is effective to prevent one form of copyright infringement, namely a complete copy of the game.  No copy of the game is complete because it cannot contain the access code.  The mod chip is a circumvention device because it circumvents or facilitates the circumvention of that measure by making the complete copy useful.”

163               The point was not developed in oral argument.  As I understand the point, it rests on the proposition that the access code prevents a complete copy of the computer game being made, in the sense that an unauthorised copy will not include the access code.  One difficulty with this argument is that there was no expert (or other) evidence as to the role, if any, played by the access code in preventing reproduction of the entire computer program.  Another is that it seems to assume that the access code is part of the computer program in respect of which copyright subsists.  This assumption is, in my opinion, dubious.

164               In any event, the short answer to the submission is that the case was not pleaded this way.  In the absence of an application to amend the pleadings, the applicants should not be permitted to raise the argument by way of an addendum to a written submission produced for the first time in the course of the hearing.

Circumvention Device

165               In view of the failure of the applicants to establish that the copyright work was protected by a technological protection measure, it is not necessary for me to determine whether the devices installed by Mr Stevens in the PlayStation consoles were circumvention devices.

166               In an affidavit read on the last day of the hearing, Mr Nabarro expressed the opinion that the chips had no purpose other than overriding the anti-piracy devices of the applicants.  The price Mr Bannon paid for being permitted to read the affidavit at such a late stage (Mr Nabarro being already on his way to the airport) was that he conceded that Mr Nabarro’s evidence was not literally true.  In particular, Mr Bannon accepted that the installation of the chip enabled the owner of the console also to play a back-up copy of the PlayStation game which lacked the access code.

167               On the evidence, I would have held that the chips installed by Mr Stevens had only a limited commercially significant use other than circumventing or facilitating the circumvention of the access code.  Thus, if the access code had been a “technological protection measure”, the chips would have been circumvention devices.  I would also have found that Mr Stevens sold or promoted (through advertisements in the Trading Post) the circumvention devices and that he knew that the devices would be used to circumvent or facilitate the circumvention of a technological protection measure.

Conclusion on the Claim under s 116A of the Copyright Act

168               It follows from what I have said that the applicants have not established that the copyright work, comprising the computer program in the PlayStation game, was protected by a “technological protection measure” as that expression is used in s 116A(1) of the Copyright Act.  Their claim to relief under s 116A(5) therefore fails.

conclusion

169               In summary,

• the applicants’ claim for infringement of trade mark succeeds;
• the applicants’ claim for contravention of s 42 of the Fair Trading Act fails;
• the applicants’ claim under s 116A of the Copyright Act fails.

170               I propose at this stage to make declarations that Mr Stevens has infringed the Sony Trade Marks.  However, I shall list the matter in order to make directions for the further conduct of the proceedings.  At that time the form of any declaratory orders can be settled.

171               My present view is that there should be no order for costs in respect of the proceedings in relation to liability, but I shall give the parties the opportunity to make submissions on this question if they wish.

Associate:

Dated:              26 July 2002