FEDERAL COURT OF AUSTRALIA

Sony Entertainment (Australia) Ltd v Smith [2004] FCA 1315

SONY ENTERTAINMENT (AUSTRALIA) LIMITED & ORS v CHRISTOPHER FRASER SMITH & ORS

N 944 of 2002

JACOBSON J

14 OCTOBER 2004

SYDNEY

THE COURT ORDERS THAT:

1.                                          Orders be made against Mr Smith and Tower Records in terms of the short minutes annexed and marked “A”. 

2.                                          Orders be made against Mr Ferris in terms of the short minutes annexed and marked “B”.  

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

REASONS FOR JUDGMENT

Introduction

1                     This is a claim for copyright infringement in 17 sound recordings (“the tracks”).  The applicants claim that infringing copies of the tracks are contained on 8 compact discs (“the CD’s”) which were manufactured and sold or authorized to be manufactured and sold by the first, second and fifth respondents.

2                     The applicants are 18 recording companies that have been shown on the evidence to control the copyright in the tracks, either as owner or as exclusive licencee.

3                     The first respondent (“Mr Smith”) is a Director and Secretary of the second respondent (“Tower Records”).  Mr Smith is a well known disc jockey in the club and dance music field.  He uses his own name and, from time to time, the stage names Chris Kross and Kriss Kross.

4                     Tower Records is an Australian recording company which manufactures, sells and distributes compact discs, in particular, for young people who follow the club and dance music “scene”.

5                     Tower Records trades under the registered business name “Slamm Distribution”.  It describes “Downunderground” as a division of its operations.  Mr Smith is the sole Director and shareholder of Downunderground Pty Ltd.

6                     The fifth respondent (“Mr Ferris”) is a disc jockey, sound engineer, music editor and music composer.  He is apparently recognized as Australia’s leading disc jockey.  Mr Ferris uses the stage name Peewee Ferris and he has appeared on Tower Records releases.

7                     The applicants claim declarations that Mr Smith, Tower Records and Mr Ferris (collectively “the remaining respondents”) have infringed the applicants’ copyright in the tracks.  The applicants also seek delivery up of infringing copies of the CD’s containing the tracks.

8                     In addition, the applicants claim an account of profits from the remaining respondents and additional damages under s 115(4) of the Copyright Act 1968 (Cth) (“the Act”).  I made an order under O 29 r 2 of the Federal Court Rules for the pecuniary claims to be determined separately from, and after, determination of the issue of liability. 

The Legislation

9                     The claims under the Act are an action for infringement of copyright under s 115 and an action for conversion under s 116.  The relevant provisions of the Act are as follows:-

10                  Section 10 of the Act defines “sound recording” as "the aggregate of the sounds embodied in a record".

11                  Section 13(1) of the Act provides, in relation to the acts comprised in copyright: “a reference in this Act to an act comprised in the copyright in a work or other subject matter shall be read as a reference to any act that, under this Act, the owner of the copyright has the exclusive right to do”.

12                  Section 85 of the Act provides that copyright in relation to a sound recording is the exclusive right to, inter alia, make a copy of the sound recording.

13                  Section 101(1) of the Act provides that “... a copyright subsisting by virtue of this Part is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorises the doing in Australia, of any act comprised in the copyright”.

14                  Section 103(1) of the Act provides that copyright is infringed by a person who, in Australia, and without the licence of the owner of the copyright “(a) sells, lets for hire, or by way of trade offers or exposes for sale or hire, an article; or (b) by way of trade exhibits an article in public; if a person knew, or ought reasonably to have known, that the making of the article constituted an infringement of the copyright...”

15                  The applicants also claim that the remaining respondents engaged in misleading and deceptive conduct by making false representations that they hold the copyright licences for the tracks.  These representations are said to be made in contravention of ss 52, 53(a), 53(c) and 51A of the Trade Practices Act 1974 (Cth) (“the TPA”).

16                  The remaining respondents are also said to have contravened the same provisions of the TPA by making false representations that they have the necessary copyright authorization for the tracks.

17                  The claims under the TPA are for injunctions, damages and other pecuniary relief under ss 80, 82 and 87 of the TPA.

The Sound Recordings

18                  The CD’s which contain what are alleged to be infringing copies of the tracks are as follows:-

19                  The sound recordings in respect of which the remaining respondents are said to have infringed copyright are as follows:-

20                  I am satisfied that the exclusive licence of the copyright in the sound recording in each of the tracks is held by one or other of five of the applicants.  They are the first applicant (“Sony”), the second applicant (“Universal”), the third applicant (“Central Station”), the thirteenth applicant (“ToCo”) and the fifteenth applicant (“EMI”).

21                  Each of the CD’s contain recordings of works performed by different artists.  The CD’s are therefore described as compilation CD’s.  In addition to the tracks which are the subject of these proceedings, the CD’s contain sound recordings of works made by artists which are not said to infringe copyright.

22                  It is convenient to set out a table showing the CD, the tracks which appeared on each CD, the artist and the name of the exclusive licencee of the copyright in the sound recording.  This is as follows:-

The Evidence of the Copyright Infringement

23                  In late July 2002, Mr J.M. Speck, the Manager of Music Industry Piracy Investigations (“MIPI”) became aware of information which suggested that infringing CDs were being released under the record labels “Downunderground”, “Tower Records” and “Slamm Distribution”.

24                  Mr Speck then arranged, in late July 2002, for copies of each of the CD’s listed at [18], other than “Fishmix1 nik fish” (CD #8), to be purchased from retail stores in Sydney.

25                  Mr Speck observed that there are references to “Downunderground” on each of those CD’s.  He also observed that there are references to “Tower” or “Tower Records” on the third, fifth and seventh of the CD’s listed at [18].  An example of this is that the words “Released and marketed in Australia by: Downunderground, a division of Tower Records, Distributed by: Slamm” appear on the packaging of “Downunderground 011 captainkirk” (CD #7). 

26                  “Fishmix1 nik fish” (CD#8) was tendered in evidence.  It is described on the packaging as a “downunderground release” in conjunction with another company.  The names “Tower Records” and “www.slammrecords.net” appear on the packaging.

27                  There is evidence in Mr Speck’s affidavit, filed on 11 September 2002, that the packaging of some of the CD’s contain representations that the manufacturer has sought and obtained the appropriate copyright licences.  Examples of these areon the packaging of “nikfish.com.au digital domain” (CD#1) the words “Licenced courtesy of Tracid Traxxx” appear underneath the recording titled “Too Many Times (Yoda Remix)” (Disc 1, Track 9) in the paper insert.  On the packaging of the “Hard Trance Nik Fish” (CD#2), the words “Music licenced from Combined Forces” appear underneath the recording titled “Shine” (Disc 1, track 9), the words “Publishing Licenced from Combined Forces” appear underneath the recording titled “On the Edge” (Disc 2, track 5), and the words “Licenced from Universal Music” appear underneath the recording titled “MotherF.ck” (Disc 2, track 4), the recording titled “E.R.K. [Tek Forum Mix]” (Disc 2, Track 12), and the recording “One Day [Le Roy Mix]” (Disc 2, Track 13).

28                  Mr Speck’s affidavit also establishes that copies of the following CDs were available for purchase from the website of Tower Records (www.towerrecords.com.au):

29                  After he obtained the first seven CD’s, Mr Speck examined the SID codes on their rims and identified the pressing plant which physically manufactured those CD’s.  The name of the pressing plant was Technicolor, which was formerly known as Southern Star Duplitek (“Technicolor”).

30                  Technicolor has produced, and there was tendered in evidence, the master CDs which it pressed.  I am satisfied on the basis of this evidence and from documentary evidence of Technicolor’s business records, that all of the CD’s, including “Fishmix 1 nik fish” (CD#8) were pressed by Technicolor.

31                  There is evidence of an indemnity dated 15 March 2000 given by Mr Smith to Technicolor indemnifying Technicolor against any claim for copyright infringement in respect of compact discs manufactured by it.

32                  The document states that any CD submitted for manufacture will be manufactured by Technicolor on the assumption that the customer has copyright.  Warranties and indemnities to that effect were given by Mr Smith in the document.

33                  Tower Records has admitted in its defence filed on 10 December 2002 that it manufactured the CD’s.  The indemnity document to which I have referred indicates that Mr Smith was also a manufacturer of the CD’s.  At very least Mr Smith authorized the manufacture of the CD’s because it is plain from the indemnity document that he sanctioned, approved or countenanced their manufacture; see University of New South Wales v Moorhouse (1975) 133 CLR 1; WEA International Inc v Hanimex Corp Ltd (1987) 77 ALR 456 at 468 (Gummow J).

34                  It is also to be inferred from the evidence of the Technicolor indemnity document that Mr Smith authorised the sale of the CD’s.

35                  I am satisfied that Mr Ferris authorised the manufacture and sale of “peeweeferris.com digital domination” (CD#4) (“the Ferris CD”).  This is to be inferred from the facts referred to below.

36                  First, the following acknowledgment is contained on the liner notes of the Ferris CD:-

“I’d like to thank Chris and Nik @ Tower.  The Sublime Crew.  One Stop DJ Records.  The DJ’s, clubs I play at, my family and everyone who has ever supported me over the years.  Also thanks to the record labels that allowed us to feature their tracks on this CD!  Mixed, recorded and mastered @ PEEWEE’S PLAYHOUSE Sydney, Australia 2002.”

37                  I infer from this that Mr Ferris manufactured the master of the Ferris CD.  This seems plain from the words “mixed, recorded and mastered at Peewee’s Playhouse”.  I also infer from this that he authorised the manufacture and sale of the Ferris CD.

38                  Second, there was evidence in Mr Speck’s affidavit of the fact that the Ferris CD was offered for sale on the Tower Records website and that there was a link from that site to the website of Mr Ferris (www.peeweeferris.com).

39                  Third, there is evidence that the artwork for the Ferris CD included a picture of Mr Ferris on the front cover.

40                  Ms Brooks, a partner in a business which provides audio engineering, mastering and testing services for the recording industry, gave evidence that she had conducted “A:B” testing of a number of the tracks.

41                  A:B testing is a comparison test of a given sound recording (“recording A”) with another sound recording (“recording B”) to identify, from audio and mastering similarities, whether recording B is a reproduction, in whole or in part, of recording A.  The A:B testing process involves an aural examination using professional equipment and a visual analysis of the sound waves generated by a recording.

42                  Ms Brooks carried out A:B testing on the majority of the tracks.  She did not test “fishmix1 nik fish” (CD#8), nor did she A:B test the following tracks:-

43                  As to the tracks upon which she conducted A:B testing, Ms Brooks was of the view that those tracks contained on the CD’s which she tested were reproductions of the original sound recordings.

44                  Ms Brooks observed that there were some differences on the master sound recordings when compared to the tracks on the CD’s.  The differences included a faster and slower tempo, higher or sometimes lower pitch, and different arrangements of sound elements.

45                  Ms Brooks said that these differences were consistent with the fact that the recordings on the CD’s are DJ mixes.  She said that DJ mixes have a sound quality which is often not of the standard of a full priced compact disc sold to a retail store.

46                  As to the tracks listed in [42] which were not A:B tested, I am satisfied that the relevant CD’s contain reproductions of the tracks in respect of which the relevant applicants have copyright.

47                  As to “Hardcore” and “Mental Atmosphere [Greencourt mix]” by Cosmic Gate, Mr Smith and Tower Records have admitted in their defence that these tracks are reproduced, in whole or substantial part, on “nikfish.com.au digital domain” (CD#1) and “fishmix 1 nik fish” (CD#8) respectively.

48                  As to “Triplet (Paranoia Mix)” by DJ Bismark and “Awesome” and “Pulsar 2002 (Picotto Verdi Mix)” by Mauro Picotto, these tracks were added to the proceedings by the further amended application and further amended statement of claim filed pursuant to orders I made on 20 May 2004.  It is claimed these tracks are reproduced, in whole or substantial part, on “peeweeferris.com digital domination” (CD#4).

49                  The remaining respondents did not file an amended defence to the Further Amended Statement of Claim and they are therefore taken to have admitted the allegation of reproduction, pursuant to Order 11, Rule 13 of the Federal Court Rules.

50                  In the course of the application for an adjournment of the proceedings on 23 September 2004, counsel for the remaining respondents fairly and properly conceded that the necessary elements of the claim of copyright infringement, apart from the defence pleaded in [32] and following of the defence, were not in issue.  This is a further reason for the finding that the records referred to in [42] which were not A:B tested were nonetheless reproduced, in whole or substantial part, from the original. 

51                  Evidence was filed on behalf of each of the exclusive licencees of the copyright in the records that they did not grant licences to the remaining respondents to reproduce, distribute, sell or offer for sale the CD’s which contain the records.

52                  In particular, evidence was given by Mr Rinaldi for Sony, Ms Don for Universal, Mr M.E. Williams for Central Station, Mr Van Den Bremer for ToCo and Mr Calleja for EMI that licences were not granted to the remaining respondents.

53                  There was evidence in the affidavit of Mr M.E. Williams of threats and pressure applied by Mr Smith as a consequence of the refusal of Central Station to grant the licences sought by Tower Records.  There was also evidence of threats made to Mr Kearney of Universal.  This evidence is relevant to the issue of whether the remaining respondents, in particular Mr Smith and Tower Records, were granted non-exclusive licences.

54                  The remaining respondents filed no evidence to support their contention that they held non-exclusive licences to reproduce the tracks.  I refused an adjournment on 21 September 2004 sought by the remaining respondents to obtain the evidence.  It follows that there is no defence to the claims made by the applicants.

55                  It follows from what I have said above that I am satisfied that I should make orders against Mr Smith and Tower Records in terms of the short minutes annexed and marked “A”.  I am also satisfied that I should make orders against Mr Ferris in terms of the short minutes annexed and marked “B”.  

Associate:

Date:                14 October 2004

THE COURT DECLARES THAT:

Copyright declarations

1.                  The first and second respondents have infringed the copyright of the first applicant in the following sound recording:-

2.                  The first and second respondents have infringed the copyright of the second applicant in the following sound recordings:-

3.                  The first and second respondents have infringed the copyright of the third applicant in the following sound recordings:-

4.                  The first and second respondents have infringed the copyright of the thirteenth applicant in the following sound recording:-

5.                  The first and second respondents have infringed the copyright of the fifteenth applicant in the following sound recordings:-

Trade practices declarations

6.                  The first and second respondents, in trade or commerce, have engaged in conduct which is misleading or deceptive or likely to mislead or deceive, in contravention of section 52 of the Trade Practices Act 1974 (Cth) (“the TPA”) in causing the CD Representations and the Indemnity Representations, as defined in the schedule hereto, to be made.

7.                  The first and second respondents, in trade or commerce, have made false representations in contravention of ss 53(a) and (c) of the TPA in causing the CD Representations and the Indemnity Representations to be made.

8.                  The first and second respondents, to the extent to which the CD Representations and the Indemnity Representations were made in respect of future matters, then contrary to section 51A of the TPA, did not have reasonable grounds for making them at the time they were made.

THE COURT ORDERS THAT:

Copyright claims - Permanent Injunctions against copying

9.                  The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from making, or authorising the making of, a copy of, the whole or a substantial part of any of the following sound recording without the licence of the first applicant:-

10.              The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from making, or authorising the making of, a copy of, the whole or a substantial part of any of the following sound recordings without the licence of the second applicant:-

11.              The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from making, or authorising the making of, a copy of, the whole or a substantial part of any of the following sound recordings without the licence of the third applicant:-

12.              The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from making, or authorising the making of, a copy of, the whole or a substantial part of any of the following sound recordings without the licence of the thirteenth applicant:-

13.              The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from making, or authorising the making of, a copy of, the whole or a substantial part of any of the following sound recordings without the licence of the fifteenth applicant:-

Copyright claims - Permanent injunctions against Making and Trading In

14.              The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from manufacturing, or authorising the manufacturing of (“Making”)and or selling, or by way of trade offering or exposing for sale, or distributing for the purpose of trade, or by way of trade exhibiting in public (“Trading in”)the following CD’s without the licence of the first, second, third, thirteenth and/or fifteenth applicants:-

Copyright claims - Permanent injunctions regarding websites

15.              The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from Trading In the following:-

without the licence of the first, second, third, thirteenth and/or fifteenth applicants from the websites at the following URLs:-

a.       www.towerrecords.com.au;

b.      www.slammrecords.net;

c.       www.downunderground.com;

d.      www.downunderground.info;

e.       www.nikfish.com.au.

Trade Practices claims - Permanent injunctions

16.              The first and second respondents, whether by their servants or agents or otherwise, be permanently restrained from making, or causing to be made:-

a.       the CD Representations and the Indemnity Representations; and

b.      any matter which is substantially identical to the CD Representations and the Indemnity Representations.

17.              The first respondent, whether by his servants or agents or otherwise, be permanently restrained from being a party to or directly or indirectly knowingly concerned in the making of:-

a.       the CD Representations and the Indemnity Representations; and

b.      any matter which is substantially identical to the CD Representations and the Indemnity Representations.

Delivery Up

18.              The first and second respondents deliver up any of the following CDs that are in the first and second respondents' possession:-

SHORT MINUTES OF ORDER
AS AGAINST THE FIFTH RESPONDENT

Copyright declarations

1.                              The fifth respondent has infringed the copyright of the second applicant in the following sound recordings:-

2.                              The fifth respondent has infringed the copyright of the third applicant in the following sound recording:-

THE COURT ORDERS THAT:

Copyright claims - Permanent Injunctions against copying

3.                              The fifth respondent, whether by his servants or agents or otherwise, be permanently restrained from making. or authorising the making of, a copy of, the whole or a substantial part of any of the following sound recordings without the licence of the second applicant:-

4.                  The fifth respondent, whether by his servants or agents or otherwise, be permanently restrained from making, or authorising the making of, a copy of, the whole or a substantial part of the following sound recording without the licence of the third applicant:-

Copyright claims - Permanent injunctions against Making and Trading In

5.                  The fifth respondent, whether by his servants or agents or otherwise, be permanently restrained from manufacturing, or authorising the manufacturing of (“Making”)and or selling, or by way of trade offering or exposing for sale, or distributing for the purpose of trade, or by way of trade exhibiting in public (“Trading in”)the compact disc “peeweeferris.com digital domination” (CD#4) or any other compact disc containing a copy of the whole or substantial part of the recordings listed in [3] and [4] of this Annexure, without the licence of each of the second and third applicants.

Copyright claims - Permanent injunctions regarding websites

6.                  The fifth respondent, whether by his servants or agents or otherwise, be permanently restrained from Trading In the record “peeweeferris.com digital domination” (CD#4) without the licence of the second and third applicants from the websites at the following URLs:-

a.       www.towerrecords.com.au;

b.      www.slammrecords.net;

c.       www.downunderground.com;

d.      www.downunderground.info;

e.       www.nikfish.com.au.

Delivery Up

7.                  The fifth respondent deliver up any of the compact discs “peeweeferris.com digital domination” (CD#4) that are in the fifth respondent' possession.

SCHEDULE OF DEFINITIONS

CD Representations means the representations that the first and second respondents have made, in trade and commerce, which are:

(a) that the copyright in the recording "Too Many Times" (Disc 1, track 9) by Kai Tracid appearing on the compact disc “nikfish.com.au digital domain” (CD#1) was licenced by Tracid Traxx;

(b) that the copyright in the recording "Hardcore (Club Mix)" (Disc 1, track 5) by Cosmic Gate appearing on the compact disc “nikfish.com.au digital domain” (CD#1) was licenced by EMI Music;

(c) that the copyright in the recording "Shine" (Disc 1. track 9) by DJ Zagros & Pacific appearing on the compact disc “Hard Trance Nik Fish” (CD#2)was licenced by Combined Forces;

(d) that the copyright in the recording "On the Edge" (Disc 2, track 5) by DJ Isaac appearing on the compact disc “Hard Trance Nik Fish” (CD#2)was licenced by Combined Forces;

(e) that the copyright in the recording "MotherF.ck" (Disc 2, track 4) by Donkey Rollers appearing on the compact disc “Hard Trance Nik Fish” (CD#2)was licenced by Universal Music;

(f} that the copyright in the recording "E.R.K. [Tek Form Mix]" (Disc 2, track 12) by DJ Bismark appearing on the compact disc “Hard Trance Nik Fish” (CD#2)was licenced by Universal Music;

(g) that the copyright in the recording "One Day [Le Roy Mix^-]" (Disc 2, track 13) by Ricky Le Roy appearing on the compact disc “Hard Trance Nik Fish” (CD#2)was licenced by Universal Music;

(h) that the copyright in the recording "Don't Laugh 2000" (Disc 2, track 7) by Winx appearing on the compact disc “downunderground 007 nik fish” (CD#3) was owned by Mr Fish, or alternatively licenced by the owner of copyright;

(i) that the copyright in the recording "After Love [MP Remix]" (Disc 1, track 6) by Blank & Jones appearing on the compact disc “downunderground 007 nik fish” (CD#3) was owned by Mr Fish, or alternatively licenced by the owner of copyright;

(j) that the copyright in the recording "F**king Society" (Disc 2, track 3) by Reeloop appearing on the compact disc “peeweeferris.com digital domination” (CD#4) was owned by Mr Ferris, or alternatively licenced by the owner of copyright Headline Records;

(k) that the copyright in the recording "Pulsar” (Disc 1, track 1) by Mauro Picotto appearing on the compact disc “peeweeferris.com digital domination” (CD#4) was owned by Mr Ferris. or alternatively licenced by the owner of copyright;

(l) that the copyright in the recording "Awesome" (Disc 2, track 2) by Mauro Picotto appearing on the compact disc “peeweeferris.com digital domination” (CD#4) was owned by Mr Ferris, or alternatively licenced by the owner of copyright;

(m) that the copyright in the recording "Triplet" (Disc 2, track 11) by Bismark appearing on the compact disc “peeweeferris.com digital domination” (CD#4) was owned by Mr Ferris, or alternatively licenced by the owner of copyright;

(n) that. the copyright in the recording "Cada Vez" (Disc 1, track 7) by Negrocan appearing on the compact disc “downunderground 006 katemonroe” (CD#5) was licenced by Wyze;

(o) that the copyright in the recording "Dancefloor Killer" (Disc 1, track 2) by Floorkiller appearing on the compact disc “downunderground 011 captainkirk” (CD#7) was owned by Tower Records, or alternatively licenced by the owner of copyright;

(p) that the copyright in the recording “I Need Your Lovin' Like The Sunshine" (Disc 1, track 12) by Mark et Claude appearing on the compact disc “happy valley 1991 to 2001 a decade of dance” (CD#6) was owned by Tower Records, or alternatively licenced by the owner of copyright; and

(q) that the copyright in the recording "Mental Atmosphere" by Cosmic Gate (Disc 1 track 11) appearing on the compact disc “fishmix1 nik fish” (CD#8) was owned by Mr Fish or alternatively, licenced by the owner of copyright.

Indemnity Representations means the representations that the first and second respondents have made, in trade and commerce, in relation to the following:

That:

(a) the first respondent, or alternatively the second respondent, had the necessary copyright authorisation to manufacture compact discs containing recordings of the 17 tracks the subject of these proceedings;

(b) the first respondent, or alternatively the second respondent, held or owned the copyright in the 17 tracks the subject of these proceedings sought to be manufactured on the CD’s the subject of these proceedings.

SCHEDULE OF ADDITIONAL APPLICANTS