Education ‑ copying of works or parts of works for educational purposes - statutory licence conferred on educational institutions to do so ‑ equitable remuneration payable by educational institutions to copyright owners ‑ analysis.of complex evidence.‑ relevant principles ‑ assessment of remuneration
Copyright Act 1968, ss 53B, 149A and also ss 10, 14, 40, 49, 52A, 52C, 52D, 163A and 203E
COPYRIGHT AGENCY LIMITED v THE DEPARTMENT OF EDUCATION OF NEW SOUTH WALES & ORS
Nos. 1 – 3 of 1983 and 1 – 12 of 1984
Coram: Sheppard J. President
Date: 20 March 1985
COMMONWEALTH OF AUSTRALIA
COPYRIGHT ACT 1968
IN THE COPYRIGHT TRIBUNAL NOS. 1 – 3 OF 1983
1 – 12 OF 1984
BETWEEN: COPYRIGHT AGENCY LIMITED
AND: THE DEPARTMENT OF EDUCATION OF
NEW SOUTH WALES & ORS
Sheppard J. President 20 March 1985
REASONS FOR DECISION
To be dealt with are IS applications made pursuant to ss. 53H and 149A of the Copyright Act 1968 (“the Act"). Section 53B ofthe Act, to which T shall refer in greater detail later on, confers on educational institutions in Australia a statutory licence‑ to make copies of material used for the educational purposes of the institution provided the conditions prescribed by the section are complied with. Sub‑section 53B (11) provides in effect that where copies of the whole or part of a work are made by or on behalf of the body administrator‑Bring an educational institution and, by virtue of the section, the making of the copies did not infringe‑copyright in the work, the body shall, if the owner of the copyright in the work makes a request, in writing, at any time during the prescribed period after the making of the copies, for payment for the making of the copies, pap to the owner such an amount by way of equitable remuneration for the making of those copies as is agreed upon between the owner and the body or,, in default of agreement, as is determined by the Copyright Tribunal on the application of either the owner or the body. The prescribed period is 4 years; Copyright Regulations, reg 5A(4). Sub‑section 53B (12) provides that where the Tribunal has determined the amount of equitable remuneration payable to the owner of copyright in a work by the body administering an educational institution in relation to copies of the whole or a part of that work that have been made by or on behalf of that body in reliance on the section the owner map recover that amount from the body in a court of competent jurisdiction as a debt due to him.
Section 149A applies where application is made to the Tribunal pursuant to sub‑section 53B (11) for the determination of an equitable remuneration to be paid to the owner of the copyright in a work for the making of copies. The parties to such an application are the owner of the copyright and the body by which or on behalf of which the copies were made. Sub‑section 149A(3) so far as relevant, is as follows
"(3) Where an application in relation to which this section applies is made to the Tribunal, the Tribunal shall consider the application and, after giving the parties to the application opportunities of presenting their cases –
(a) shall make an order determining the amount that it considers to be equitable remuneration to the owner of the copyright for the making of the copies ....................
(b) may, subject to the regulations, make such order as to costs as the Tribunal thinks fit"
Section 163A provides that an owner of copyright map make an application to the Tribunal by his agent. It further provides that two or more owners of copyright map jointly make a single application to the Tribunal by the same agent against the same person or body.
The applicant. Copyright Agency Limited, is the agent of the owners of the copyright in the works, the subject of the applications. It was incorporated in 1974 as a company limited by guarantee. Its members are authorsand publishers. According to its Secretary Mr.Hayes, it was incorporated for the purpose of obtaining agency appointments from authors and book publishersto enable it to license photocopying by a variety of educational institutions and organisations. In his words it is supported by the Australian Copyright Council Limited, the Australian Society of Authors and the Australian Hook Publishers Association, both financially and by the provision of staff. Mr. Haves said that those bodies co‑operated in the establishment of Copyright Agency Limited. It is clear from the evidence of Mr. Haves, and also that of Mr. Banki, who is the Executive Officer of the Australian Copyright Council, that the applicant is geared to operate on a large scale and is hopeful, once the decision in the present applications is announced. that large numbers of copyright owners, principally authors, will authorise it to act on their behalf to collect remuneration to which they are entitled under s 53B of the Act.
The respondents to the applications are each of the Departments of Education for the States of New South Wales. Victoria, Queensland, South Australia and Western Australia, the Schools Authority of the Australian Capital Territory, the Association of Independent Schools, the Roman Catholic Archbishop of Sydney, the Macquarie University, the University of Sydney, the New South Wales Institute of Technology, the South Australian College of Advanced Education andthe New South Wales Department of Technical and Further Education. It map be that some of these bodies are not incorporated and thus not able to be sued in a court in the names or styles selected by the applicant. I refer in passing to para 1013)(a) of the Act. But no point was taken in relation to that matter and in the way that the applications were conducted it is unnecessary to refer to it further.
Each application was made in respect of one or more specific instances of copying by an educational institution. For instance, application No. 1 of 1983, which is an application relating to copying by the New South Wales Department of Education is made in respect of the copying of parts of a number of works. The first was 130 pages of a work, "Betty and Jim Mathematics 6" on 6th August 1982. Thirty-five copies of each page were made. The copying was done by the Morgan Street Public Schoolat Broken Hill. Another instance of copying included in the application was the making of 30 copies of a work. "Daybreak", which is apoem in an anthology, "One Hundred Poems ‑ An Anthology for Year Ten". The copying was done on 16th August 1982 at the Portland Central School.
It is apparent from a consideration of the relevant sections of the Act and of the applications which have been made that what the Tribunal is strictly bound to do is to endeavour to reach a conclusion as to what amount should be paid by way of equitable remuneration in respect of each specific instance of copying. That is not, however, precisely what the parties wish done in the present cases. The cases are test cases. They have been presented in an attempt to persuade the Tribunal to fix a remuneration which will apple in respect of all copying in all educational institutions in Australia, provided that the copying is done pursuant to the provisions of s 53B and in accordance with the conditions which it prescribes. The parties have attempted to provide, from the copping which has been done in various institutions, whether primary, secondary or tertiary, since s 538 of the Act came into force, a selection of copying instances designed to give an overall indication of the range of works being copied in educational establishments.
The purpose of the attempted exercise is well summarised in written submissions made by counsel on behalf of the universities and colleges of advanced education as follows:
''2. To avoid a multiplicity of proceedings under Section 538 it is respectfully requested by all parties that the Tribunal determine the same equitable remuneration for each of the Applications. This will probably involve the Tribunal applying some averaging process, and map produce a somewhat artificial result, but for the reasons given below it is more likely to facilitate the proper functioning of Section 53H than any alternative.
4. The reason for the Respondents' request that the Tribunal determine the same rate for copping for all works, and that the determination be‑expressed on the basis of cents or fractions of cents per copy page, is that this will facilitate and reduce the costs of record keeping, as well as collection and distribution of remuneration to copyright owners."
As was recognised by all parties, there map be difficulties, if one were to apply strictly the provisions of the sections, in the Tribunal approaching the matters in this way. But from a practical point of view it is clearly desirable that the parties' wish that there be an across the board figure arrived at be met. That is what I propose to attempt to do. I nevertheless acknowledge that there map be some unfairness, as amongst the various owners of copyright in dealing with the applications in this way. On the other hand, it should be remembered that nothing the Tribunal does can affect any copying instances other than those covered by the applications. If the applicant or any copyright owner or, indeed, any educational institution, is dissatisfied with the decision, fresh applications may be made to the Tribunal, assuming no agreement is reached, for the determination of equitable remuneration for the copying of any works not the subject of the applications now under consideration or for the copying of works which are the subject of the applications on occasions other than those specified therein. For this reason the course which the parties wish taken will not operate legally to deprive any copyright owner of any substantial entitlement to remuneration or impose any unfair burden on any educational institution. And one would hope that, at the least, the decision‑will provide a basis for agreement in most cases.
The Legislation in Question
The sections of the Act pursuant to which these applications are made were added into the Act in 1980 by the Copyright Amendment Act1980 (No. 154 of 1980). They came into force on 1 August 1981. The sections had been recommended by the Copyright Law Committee on Reprographic Reproduction which reported to the then Attorney-General of the Commonwealth on 15th October 1976. The reason for the establishment of the Committee is plain. It was found necessary, to consider the problem caused by the greatly increased copping of works of all kinds in educational establishments. As the Committee noted (para. 1.01 of Section 1 of the Report):
"The past 10 years has brought about a very considerable change in methods of reprographic reproduction of published material. Equipment for facsimile copying of ‑high quality that enables copies to be made easily and cheaply is now widely available in libraries, schools, colleges, universities and offices. As a result, large numbers of people now have the facility to reproduce copyright material without having to resort to laborious methods such as copping by hand or typewriting, or by slow and expensive methods of copping using the photocopying machines of a decade ago. Those methods set their own quantitative limitations on the amount of material that might be copied".
Section 53B confers on educational institutions a statutory licence to make copies of articles in periodical publications and of works, or parts of works, other than articles in periodical publications. Despite the wide range of material which is in question in the present applications, none of it involves the copying of the whole or part of an article in a periodical publication. All are copies of works or parts of works other than articles in such publications.
The statutory licence in question i3 conferred, in respect of works not being articles contained in periodical publications, by ss 538(2) of the Act. That section and certain other provisions of 538 were amended by the Copyright Amendment Act1984 (No. 165 of 1984) but not in material respects. The reason for the amendments was to omit from the section reference to resource centres. The section is now in a more simplified form than it was before the amendment and I propose to refer to it in its present form. I point out, however, that strictly the section which applies to the various instances of copying in question in the applications is the section as it was before the 1984 amendment. Since, however, nothing turns on this for present purposes it is easier and just as correct to refer to the section in its amended form. The statutory licence is provided for in ss 53B(2) which is as follows:
“(2) Subject to this section the copyright in a work (other than an article in a periodical publication) is not infringed by the making of copies of the whole or a part of that work, by or on behalf of the body administering an educational institution, for the teaching purposes of that or another educational institution."
The definition of "educational institution" which appears in s. 10 of the Act was also amended in 1984 but not materially for present purposes. It includes a school or similar institution at which full time primary education or full time secondary education is provided, a university, a college of advanced education or a technical and further education institution and an institution that conducts courses of primary, secondary or tertiary education by correspondence or on an external study basis. There are certain other institutions which are also included in the definition, but it is unnecessary to refer to these ss 53B(3) is as follows:
“(3) Without limiting the generality of sub-section (1) or (2), a copy of the whole or a part of a work shall be taken to have been made for the teaching purposes of an educational institution if:
(a) It is made in connection with a particular course of instruction provided by that institution; or
(b) It is made for the purpose of inclusion in the collection of a library of that institution.”
Sub-sections (5) and (7) of s 53B are as follows:
“(5) Sub-section (2) does not apply in relation to copies of, or of more than a reasonable portion of, a work that has been separately published unless the person who makes the copies, or causes the copies to be made, for or on behalf of the body administering the educational institution, is satisfied, after reasonable investigation, that copies (not being second‑hand copies) of the work cannot be obtained within a reasonable time at an ordinary commercial price.
(7) Sub-section (2) does not apply to copies of the whole or a part of a work (not being an article contained in a periodical publication), being copies made, by or on behalf of the body administering an educational institution for the teaching purposes of an educational institution, unless there is made, by or on behalf of that body, as soon as practicable after the making of those copies, a record of the copping setting out:
(a) if the International Standard Book Number in respect of the work is recorded in the edition of the work copied ‑ that number;
(b) if the International Standard Book Number in respect of the work is not so recorded
(i) the title or description of the work;
(ii) the name of the publisher of the edition of the work; and
(iii) the name of the author of the work (if that name is known);
(c) the page numbers of the pages in the edition of the work that have been copied, or, in a case where a page so copied. does not bear a pace number, such description of the page as will enable it to be identified;
(d) the date on which those copies have been made;
(e) the number of copies made; and
(f) particulars of such other matters as are prescribed."
The expression "reasonable portion" used in ss 53B(5) is defined in ss 10 (2) as follows:
"10(2) Without limiting the meaning of the expression "reasonable portion" in this Act, where a literary, dramatic‑or musical work is contained in a published edition of that work, being an edition of not less than 10 pages, a copy of part of that work, as it appears in that edition, shall be taken to contain only a reasonable portion of that work if the pages that are copied in the edition
(a) do not exceed, in the aggregate, 10% of the number of pages in that edition; or
(b) in a case where the work is divided into chapters - exceed, in the aggregate, 10% of the number of pages in that edition but contain only the whole or part of a single chapter of the work.”
By ss 53B(8) the record of the copping of a work required to be kept by ss 53B17) map be kept in writing or in any other matter prescribed by the regulations, and if it is kept in writing, shall be in accordance with the prescribed form. Regulations have been made prescribing the manner in which records are to be kept.
I have earlier referred to ss 538(11) and s I49A which are the provisions pursuant to which these applications are made.
Although they are on the periphery of the case, there are some other sections which should be mentioned. Section 203E entitles the owner of copyright in a work or his accent to inspect the records kept by an educational institution pursuant to the provisions of ss 53B(7) of the Act. I refer generally to ss (2), (3) and (5).
Section 40 of the Act provides that a fair dealing with a literary, dramatic, musical or artistic work, or with an adaptation thereof, for the purpose of research or study does not constitute an infringement of the copyright in the work. The question of the interrelation between s 40 and s 53H of the Act, as well as certain other sections thereof, was considered by a Full Court of the ‑Federal Court of Australia in Haines v. Copyright Agencv Limited (1982) 42 A. L. R. 549. There Fox J, in whose judgment Bowen C.J. agreed (p 550), said (pp 555-6):
"The question has been debated whether s 40 and s 53B overlap, in the sense that a particular act of copying map be protected from being an infringement by both sections, but it is not necessary to express a final view on that matter. They have some affinity, in so far as s 40 relates to research and study, and s 53B relates, so far as relevant, to the teaching purposes of an educational institution. It is, however, wrong to say of s 40 that it allows for virtually the same amount and type of copying, in the context of suggesting its use as an attractive alternative to s 53B.
The particular passage in the memorandum [a memorandum issued to school principals by the Director General of the N.S.W. Education Department], and the tenor of the memorandum as a whole, express a proposition that denies the very purpose for which s 53B was inserted. That section is one of three (ss 53A, 53B and 53C), which appear in new Div 5A under the heading ‘Copying of works in‑ educational institutions'. The purpose of s 53B is to permit, but also to control, the making of multiple copies which modern means of reprographic reproduction have greatly facilitated. It is contended that s 40 must nevertheless be given its full effect. What the submission fails to take into account adequately is that the essential ingredient of s 40 is fair dealing with a work for the purpose of research or study. What is fair dealing is not fixed by reference to the number of copies, but is to be determined by reference to the facts of each case. An answer to the question must take into account the existence and effect of s 53B (and s 53D). Moreover, it is important to the proper working of the sections that a distinction be recognized between an institution making copies for teaching purposes and the activities of individuals concerned with research or study. The memorandum was in relevant respects addressing itself to the former situation."
Then I should mention s 49 which provides for the copying by libraries and archives for users. Such copying map be done pursuant to a request by a person to be ‑supplied with a copy of an article or part of an article contained in a periodical publication or of the whole or part of a published work. The request must be accompanied by a declaration stating that the person making the request requires the copy for the purpose of research or study and will not use it for any other purpose and that he has not previously been supplied with a copy of the same article or other work by an authorised officer of the library or archive. Sub-sections 49 (6) and (7) confer statutory licences to make the copies for which the section provides.
Section 53A provides for the multiple copying of insubstantial portions of works. It provides that copyright in a literary or dramatic work is not infringed by the making, on the premises of an educational institution, by any person, for the purposes of a course of education provided by the institution of a copy or copies of a page or pages of the work in an edition of the work or of works that include the work. The section does not apply to the making of a copy or copies of the whole of a work or the making of a copy or copies of more than 2 pages thereof in an edition of the work or of works that include the work unless 1 per cent of the total number of pages in the edition exceeds 2 pages and the total number of pages so copied does not exceed 1 per cent of the total number of pages of the edition. None of the copying in question in the present case falls within s 53A.
Finally I should mention ss 53C and 53D. The former makes certain provisions in relation to illustrations accompanying articles in other works which are affected by s 53A or s 53B. Section 53D provides for multiple copying under statutory licence by institutions assisting handicapped readers.
It is to be observed that the obligation of an educational institution which has copied material pursuant to s 538 of the Act is to pay, to the owner of the copyright such an amount by way of equitable remuneration for the making of the copies as is agreed upon or is determined by the Tribunal. The intention of the sub-section is thus to confer upon the owner of the copyright a right to equitable remuneration for the making of the copies. No such right is conferred on the publisher of a work unless he happens to be, or to have become, the owner of the copyright. His entitlement is then as the owner of the copyright, and not as the publisher or the copyright owner's agent by force of some contractual arrangement in a publishing agreement.
The right to reproduce a work in a material form is one of the exclusive rights conferred on a copyright owner; see sub-para 31 (1)(a)(i) of the Act. Subject to questions of assignment and devolution by operation of law, the owner of the copyright in a work is the authors; see s 35. It follows that the equitable remuneration which needs to be determined is the remuneration which will equitably, that is fairly, compensate the owner for the loss of the exclusive right which he has to reproduce a given work‑or a substantial part thereof; see s 14. It is important to emphasise that no question of the right of any other person, for example, a publisher, unless he happens to be the owner of the copyright, is involved. It is purely a question of arriving at equitable remuneration for the author. No doubt an author map make arrangements contractually with a publisher and become bound by agreement to pay to a publisher the whole or apart of moneys which map be recoverable from an educational institution for s 53H copying. But that is not a matter with which the Tribunal is concerned in determining the outcome of these applications. The distinction I have drawn map seem obvious, especially as the Act only confers rights upon copyright owners (who are usually authors), but It will have an importance when I come to consider some of the evidence which there is as to prices which have been paid for copying by institutions, sometimes to copyright owners, but more usually to their publishers, and as to royalties payable to authors.
The Tribunal’s Earlier Decisions and some Authorities
It is next appropriate to refer to earlier decisions of the Tribunal in relation to the fixing of equitable remuneration in other areas of copyright and to certain authorities. There has been no previous case concerned with the provisions of s S3B of the Act. But in two earlier cases not dissimilar problems arose from that which confronts the Tribunal here except that in those cases the problems arose in a truly commercial situation. Here the Tribunal is concerned with educational institutions not carried on for profit and the use by lecturers and teachers of material for the purpose of teaching or instructing students in the various disciplines which are involved. The two earlier cases are "Report of the Inquiry by the Copyright Tribunal into the Royalty: Payable in Respect of Records Generally", published 24 September 1979; see particularly, pp. 97‑101 and W.E.A. RecordsPty, Limited v. Stereo F.M. Pty Limited (1983) 48 A.L.R. 91 at pp 110-113. In each case the Tribunal applied the analogy of the Tribunal in the W.E.A. Records case said (p 111):
"The amount represented by equitable remuneration could not, of course, be greater than the amount of damages far infringement of copyright ... If it were, there would be no incentive to give any undertaking under s 109. The relationship between equitable remuneration and damages in infringement cases was considered at pp. 99‑IOI in the 1979 Report. The measure of damages in such cases has been the amount of royalty which the infringer would have had to pay for a licence, had he acted lawfully instead of unlawfully: Stovin‑Bradford v. Volpoint Properties LimitedC1971J 3 W.L.R. 256; C1971J 3 All E.R. 570; Interfirm Comparison (Australia) Pty Limited v. Law Society of New South Wales (1975) 6 A.L.R. 445; Australasian Performing Rights Association v Grebo Trading Co Pty Limited (1979) 23 A.C.T.R. 30. These cases apply to copyright cases the principles developed and applied in patent cases: see General Tire and Rubber Co v Firestone Tyre and Rubber Co Limited C19763 R.P.C. 197, per Lord Wilberforce (at, 212‑5)."
The General Tire case was a patent case, but, as the Tribunal said, the principles enunciated in it are apt for copyright cases as well. The leading speech was delivered by Lord Wilberforce. Amongst other things he said (t19763 R.P.C. at pp 212‑213):
"1. Many patents of inventions belong to manufacturers, who exploit the invention to make articles or products which they sell at a profit. The benefit of the invention in such cases is realised through the sale of the article or product. In these cases, if the invention is infringed, the effect of the infringement will be to divert sales from the‑ owner of the patent to the infringer. The measure of damages will then normally be the profit which would have been realised by the owner of the patent if the sales had been made by him (see The Unified Horse‑shoe and Nail Co. Ltd. v. John Stewart & Co. 13 AC 401).
2. Other patents of inventions are exploited through the granting of licences for royalty payments. In these cases, if an infringer uses the invention without a licence, the measure of the damages he must pay will be the sums which he would have paid by way of royalty if instead of acting illegally, he had acted legally. The problem, which is that of the present case - the respondents not being manufacturers in the United Kingdom - is to establish the amount of such royalty. The solution to this problem is essentially and exclusively one of evidence, and as the facts capable of being adduced in evidence are necessarily individual, from case to case, the danger is obvious in referring to a particular case and transferring its conclusions to other situations."
His Lordship referred to some authorities and continued (p 213):
"Before a "going rate" of royalty can be taken as the basis on which an infringer should be held liable, it must be shown that the circumstances in which the going rate was paid are the same or at least comparable with those in which the patentee and the infringer are assumed to strike their bargain."
Lord Wilberforce then postulated a third category of case. He said (pp 213-214):
"3. In some cases it is not possible to prove either (as in 1) that there is a normal rate of profit, or (as in 2) that there is a normal, or established, licence royalty. Yet clearly damages must be assessed. In such cases it is for the plaintiff to adduce evidence which will guide the court. This evidence map consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications or in the witness box; possibly of the profitability of the invention; and any other factor on which the judge can decide the measure of loss. Since evidence of this kind is in its nature general and also probably hypothetical, it is unlikely to be of relevance, or if relevant, of weight, in the face of the more concrete and direct type of evidence referred to under (2). But there is no rule of law which prevents the court, even whenit has evidence of licensing practice, from taking these more general considerations into account. The ultimate process is one of judicial estimation of the available indications."
The emphasis is mine.
His Lordship next referred with approval to Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 R.P.C. 157. He made particular reference to what had been said by Fletcher Moulton, L.J. at pp 164-5. Part of what Fletcher Moulton, L.J. there said was as follows:
"The reward to a patentees for his invention is that he shall have the exclusive right to use the invention, and if you want to use it pour duty is to obtain his permission. I am inclined to think that it would be right for the court to consider what would have been the price which - although no price was actually quoted – could have reasonably been charged for that permission, and estimate the damage in that way. Indeed, I think that in many cases that would be the safest and best way to arrive at a sound conclusion as to the proper figure. But I am not going to say a word which will tie down future judges and prevent them from exercising their judgment, as best they can in all the circumstances of the case, so as to arrive at that which the plaintiff has lost by reason of the defendant doing certain acts wrongfully instead of either abstaining from doing them, or getting permission to do them rightfully."
Again the emphasis is mine.
After this quotation Lord Wilberforce in the General Tire casesummarised‑the position as follows ( R.P.C. at pp 214-5):
"A proper application of this passage, taken in. its entirety, requires the judge assessing damages to take into account any licences actually granted and the rates of royalty fixed by them, to estimate their relevance and comparability, to apply them so far as he can to the bargain hypothetically to be made between the patentee and the infringer, and to the extent to which they do not provide a figure on which. the damage can be measured, to consider any other evidence, according to its relevance and weight, upon which he can fix a rate of royalty which would have been agreed."
I think a proper analysis of what Lord Wilberforce and Fletcher Moulton L.J. have said discloses that the preferred approach is to see first of all whether there is a normal rate of profit or royalty. If the circumstances are comparable, this will establish a going rate which is the best guide to what the parties themselves would have agreed upon if they were treated notionally as a willing, but not anxious, licensor and a willing, but not anxious, licensee. In cases where the evidence does not disclose a going rate of profit or royalty, it may nevertheless be possible to approach the matter upon the basis of a hypothetical bargain. There may be evidence which would enable a court or tribunal to conclude that in the circumstances of the instant case willing but not anxious parties would have arrived at a particular figure for a licence. But the evidence will need to be carefully scrutinised to ensure that comparisons with other cases do not lead to a result which is artificial
If the notional bargain approach is not available or thought to be fallible in the circumstances of a given case, the task becomes one of judicial estimation, the court or tribunal doing its best in the circumstances upon the basis of the evidence which there is. This is always a difficult task but it is by no means an uncommon one. Courts and tribunals have this task in many fields of the law. An example is the assessment of damages, particularly in personal injury cases, where substantial difficulty may be encountered in quantifying amounts to be awarded either for future economic loss or for damages for pain and suffering and loss of amenities of life. Another area is that sometimes faced by industrial tribunals where they are required to fix salaries or wages in an application for a first award and evidence of a going rate is either absent or unsatisfactory. Yet another area is that of the valuation of property, particularly land or shares, in cases where there are no comparable sales or where comparable sales do not really give a satisfactory guide to the solution. In a valuation of shares case, Federal Commissioner of Taxation v St. Helens Farm (A. C. T.) Pty Limited (19811 146 C.L.R. 336 Aickin J. said (p 397):
"The task of a trial judge is to approach a question of valuation in accordance with established principles and to endeavour to arrive at a fair and just figure, bearing in mind that valuation by expert witnesses is not an exact science and that the task involves in most cases a consideration of differing expert opinions. In the end his conclusion is not merely a judgment as to the value of the relevant property but is in the nature of a 'value judgment'. It is not a judicial discretion in the technical sense of that term but the boundary line between the formation of a value judgment and the exercise of a discretion is neither clear nor precise."
Later he said (p 398):
"The process of valuation .in accordance with ordinary principles may produce different results from different judges approaching the task in accordance with proper principles and making no errors of law. There is thus invariably a range of figures, any one of which may quite well satisfy a particular judge that it is as close to true value as it is possible for him to attain."
The principal evidence called in the applicant's case consisted of evidence which it had collected of various permissions which had. been granted by authors or publishers, principally the latter, in relation to copying done by educational institutions in Australia. The permissions spanned the period 1980 to 1984. For the most part, they occurred after the coming into force of the 1980 amendments to the Act on 1 August 1981 when the institution in question probably had a statutory licence to do the copying. I say "probably" because the precise circumstances of each case were not revealed and it may have been that one or more of the conditions prescribed by s 53B was not complied with.
Each of the cases was a case where money was paid to the author or publisher for the copying which was done. Sometimes this was calculated on a per page basis; sometimes it was a flat overall fee. Sometimes what was copied was the whole of a work apparently out of print. Sometimes it was only a portion of a work. The amounts charged varied considerably. The per page rates extended from 1 cent per page to as much as 10 cents per page in some cases. There was originally some dispute about some of the items relied upon but in the end there was none. The various instances were tabulated so that they could be seen in their totality., There‑ were 74 permissions in all. The tabulation showed that almost half the permissions had been sought from and granted by Bay Books Pty Limited which trades as Angus & Robertson Publishers. Most of the other permissions were granted by other well known publishing houses including Jacaranda Wiley, McGraw-Hill Book CompanyAustralia Pty Limited and Penguin Books Australia Limited. Only, in one case was permission sought directly from an author. On 3 August 1982 the Armidale College of Advanced Education was granted permission by Kylie Tennant to copy one of her works. The rate per page was 4 cents.
The purpose of this evidence was primarily to establish that there was, if not a going rate, then a charge most commonly made for copying in the educational field. To further this purpose the applicant provided the tabulation to an actuary, Mr. Whittle. He was first provided with what was described as an interim schedule of permissions. This contained no permission granted in 1984. Subsequently he was provided with the up to date tabulation to which I have referred. Mr. Whittle 's original analyses were based on the interim tabulation. He reported further when the later tabulation and some other correcting material were provided to him. The later material did not lead to significant change in his conclusions.
In a report which is in evidence Mr. Whittle referred to the schedule of permissions. He said the purpose of the analysis was to display in a valid form the distribution of the rates charged for copping printed material and to draw from that an inference as to the level of charge commonly made. He said that the copies had been made by institutions over the period from mid-1980 to mid-1983. Mr. Whittle said that the ultimate purpose was to point to a "most common charge". He said that this was different from taking an arithmetical average and that he considered that the latter concept was not as useful in establishing a usual practice as was the concept of the "most common charge". He said that an arithmetical average would take into account the extremes which might have little validity in trying to establish an accepted usual practice. He referred to the fact that the process he advocated was akin to that used some years ago in the determination of the "most common fee" charged by medical practitioners for the purpose of setting the level of rebates for medical benefits.
Mr Whittle said that extreme cases, that is, the very low and the very high, were excluded because it was reasonable to take the view that such extreme cases probably had some special features which made them unsuitable for use in establishing a community practice.
He said that the cases were considered in two separate groups. The first group consisted of those cases for which a specific charge per page was made, for example, 4 cents per page.
The second consisted of cases where a charge was made which was not expressed as a charge per page, for example, $20 for 448 pages. Such cases were transformed by him into a charge per page basis to make them compatible with the cases in the first group. The two groups were then combined. It should be mentioned that where a lump sum charge was made the price per page sometimes yielded a figure higher than the 10 cents per page earlier referred to.
Mr. Whittle prepared a number of histograms, that is graphs, to show the outcome of his analysis. The most helpful of these are numbered 2C and 3C. I have appended copies of these to this decision.
Histogram 2C shows that the most common or dominant charge was 4 cents per page. However, Mr. Whittle pointed out that the dates of the cases selected ranged from mid-1980 to mid-1983. He said that over that period inflation of about 34 per cent had occurred in Australia. He continued:
"It is therefore reasonable to look at an alternative set of charts where the charge made has been updated to take inflation into account. For example if in a particular case a charge of 4 cents was made in July 1980, it is reasonable to argue that a somewhat greater charge to take into account the effects of inflation would have been appropriate in say mid-1983."
He therefore adjusted his second series of charts by increasing the charge per page to account for inflation, each case being taken from the last day of the quarter to which the relevant case relates up to 30 June 1963. He said that the increases had been calculated in accordance with the consumer price index. The results were displayed in 3 further histograms the most important of which was 3C. Of this he said 2 features emerged:
“(a) The first is that the 1 cent group appears to be significant However, its significance is caused by the effect of inflation which is relatively small on these charges which are shown in the 2C chart in the half cent column.
(c) The second is that the 4 cent and 5 cent charges taken together are again the dominant "most common charges".
He concluded that the most common charge after allowing for I inflation adjustment "is about equally divided between 4 cents and 5 cents". It is to be observed, however, that whilst Mr. Whittle’s conclusions are undoubtedly correct, there is a significantnumber of cases which yielded either 1 or 2 cents. In consequence the dominance of the 4 to 5 cents grouping has receded somewhat and the 1 to 2 cents group has become more significant. Thiswas referred to in Mr. Whittles supplementary report as follows:
“The effect of the 1 cent and 4 cent charges has been examined on two bases.
(i) Without adjustment for inflation The numberof 1 cent charges is increased by 20,568 incidences from 18,729* to 39,297.
The number of 4 cent charges is increased by 14,550 from 31,921* to 46,471.
(*) as shown in Appendix 2C of the first report.
From this, the 4 cent charge clearly becomes the “most common charge”.
(ii) With adjustment for inflation
The number of 1 cent charges is increased from 21,705* to 42,273.
The number of 4 cent charges is increased from 16,410* to 30.960.
(*) as shown in Appendix 3C of the first report.
The conclusions remain the same as in the first report, ie.. that the 4 cent and 5 cent charges taken together are the dominant "most common charge". The division between the 4 cent and 5 cent charges is redistributed by the inclusion of the new items; the proportion of 4 cent charges being larger than that of the 5 cent charges.”
The respondents attacked Mr. Whittle’s approach, not because what he had done based on the tabulation of charges was inaccurate, but because, so they submitted, the tabulations were not an accurate reflection of the true position. Their principal criticism of them was their failure to take into account a great number of free permissions which had been granted in the same period. Mr. Whittle did not disagree with counsel for the universities and colleges that it may have been appropriate to include the large number of free permissions of which there is evidence. He expressed no view as to what the position would have been if this had been done except that he conceded that, if the number of free permissions was large enough and if the most common charge basis were adopted, the upshot might be a most common charge of nothing.
Counsel for the Department of Technical and Further Education, concentrated attention on the question of whether the most common charge basis was the best approach or whether it may not have been better to take an average. The cross-examination was inconclusive. But it emerged during the course of it that publishers fixing fees for permissions did not themselves appear to make adjustments for inflation. Throughout the period of the four years or so that are involved, little variation in the charges made is to be perceived. Some are one cent per page, some two, some four, some five and. others more. That range is maintained: at all times whether the year be 1980 or 1983 or 1984. It must be remembered that the purpose for which the exercise was done was to indicate a going rate, or at least a most common charge. If the parties to transactions used to establish a going rate do not themselves make any adjustment for inflation, there may be a danger in making it for them. Strangely, if the inflation adjustment is discarded, the proximity of the one to two cent group to the four to five cent group would be less marked with the result that it map be thought that the applicant would be advantaged if this course were taken rather than disadvantaged as might at firsthave been thought.
In exhibits 1 and 63 the respondents tabulated over 200 instances of free permissions. They claimed that these were not exhaustive of the number of examples of free permissions which were available. Counsel for the applicant put forward a number of reasons why it was inappropriate, to take free permissions into account.
The next evidence to which I refer is evidence of tabulations relied upon by the respondents. These if used as a guide, could lead to a result in which the amount per page to be awarded would be of the order of .5 cents, rather than the 4 to 5 cents which is the springboard for the applicant's case. The respondent’s tabulations are based upon the royalties which authors usually receive upon the sale of their works. Before coming to the detail of the tabulations there are some background matters to which I should refer.
Apparently in Australia - and I gather elsewhere - it is usual for an author to enter into an agreement with a publisher pursuant to which he will receive by way of royalty 10 per cent of the retail price of each book sold. Thus if a book sells for $10 he may be expected to receive $1 in royalty. Some publishing agreements deal with the entitlement of authors to other remuneration. Their entitlement is usually more generous than their royalty entitlement. A number of pro forma publishing agreements are in evidence. They vary in the detail of their terms. Sometimes they are not comprehensive so that s 53B copying is not covered at all. Where it comes within the umbrella of some general provision, the amount an. author might receive map vary from 50 per cent to 80 per cent of the gross amount paid. The latter percentage is presently being sought as the invariable rule by the Society of Authors.
For the respondents' purposes the royalty payment is the critical factor. As I have said it is usually 10 per cent, but it may sometimes be slightly more, particularly if a minimum number of sales are achieved. And a greater percentage may be paid for use in anthologies or for paperback sales. However, it would seem to me to be unlikely that an educational author would receive more than 10 per cent in many cases. Sometimes educational works, thought by a publisher to be in demand, are commissioned. In such cases the copyright, by agreement, often becomes that of the publisher.
Counsel for the respondents introduced their royalty approach by cross-examining a number of authors and publishers called in the applicant's case by asking them whether they could hope for better than to receive a royalty each time copies of their work were required. The point is made in a question asked of Professor Donald Horne who was called in the applicant's case. Professor Horne is an author and also an associate professor at the University of New South Wales. The question was:
"If I could ask you to make the assumption that every time you give your students - or, using yourself as an example - an extract, whether it is two pages or 20 pages of a particular work - every time you, give a student that extract it represents a single lost sale to the author. Is there any reason you can think of why for that lost sale the author, as copyright owner, ought to get more than he would have got if he had made the sale?"
The questions and others like it caught some witnesses, including Professor Horne, by surprise. For reasons which will emerge when I come to decide what the outcome of the case should be, I do not feel it profitable to refer to the answers given by Professor Horne to this and other questions along similar lines or to the answers given to similar questions by other authors and publishers. My reasons are partly because the witnesses were not prepared for the questions and partly because the question itself and the answers involve matters which are argumentative and not factual. For present purposes it is the approach made by the respondents which needs to be understood. That approach is the basis upon which their tabulations are formulated.
The tabulation formulated by the universities and colleges was prepared under the supervision of Mr. Crittenden who is the Librarian at the Canberra College of Advanced Education. The tabulation has 8 columns headed respectively. "Institution and Date of Copying", "Title of Work or Volume containing Work", "Author", "Publisher", "Number", "Pages and Volume", "Year and Recommended Retail Price" and "Price Per Page at (say) 10 per cent Royalty Rate inCents". An example of what was done isprovided by a consideration of the first item which was the copying on 6 March 1982 of a work, The Accounting Framework – a Contemporary Analysis, written by R. Mathews and published by Longman Cheshire. There were 732 pages in the work. The recommended retail price in 1982 was $27.95. In 1983 it was$31.50. The price per page in cents was 3.818 in 1982 and 4.303 in 1983. The author's entitlement was 10 per cent of these figures, that is .38 cents in 1982 and .43 cents in 1983.
Sixty-six instances of copying were taken. The average price per page payable to the author was .45 cents. It was the respondents’ submission that this provided not a going rate or evidence otherwise helpful in resolving the problem upon a notional bargain approach, but, nevertheless, a more reliable guide to what the outcome should be than was provided by the applicant's most common charge approach which yielded between 4 and 5 cents per page. A similar exercise done for the New South Wales Department of Education yielded a figure of .53 cents per page.
In addition to leading the more specific evidence concerning their tabulations, the parties led a great deal of general evidence about the writing and publishing industry, the use of material in educational institutions, the fact that some material used came from the works of authors who were in the general field of writing, that is to say, they wrote commercially but their work was used to an extent in schools, universities or colleges, the fact, however, that most material used by educational institutions was expressly written for educational use by authors from various disciplines, and the practices of the educational institutions in copying.
I think there is some significance in the distinction which exists between, the use of the work of authors who are in the general field of writing and those who write for educational purposes or, at least for general academic purposes, alone. Especially is that so in the tertiary area. There, many writers have an interest in their works being widely used for teaching purposes. It is one way in which their own careers are advanced. Unquestionably, selection committees put a premium on the amount of publishing candidates for academic promotion have done. There are views that this is overdone and that more attention needs to be paid to teaching ability, but at the moment publishing is a widely accepted criterion which may, in a close contest, tip the balance in favour of a candidate for promotion who has published more widely than his rival.
Professor Dennis Pearce is a Professor of Law in the Faculty of Law at the Australian National University. He has been a member of a working party established by the Australian Vice-Chancellors' Committee on Copyright. The Committee was established to look at a diversity of copyright matters relating to the tertiary education sector. Professor Pearce has been an active member of the Committee since 1974 when the Committee was established for the purpose of preparing submissions to be made to the Copyright Law Committee on Reprographic Reproduction. It was largely through Professor Pearce's efforts and those of Mr. Banki. who is the Executive Officer of the Australian Copyright Council, that these proceedings were initiated and presented with the degree of cooperation to which 1 have referred.
In his statement Professor Pearce said:
“10. The advancement and employment of persons in academic institutions is based primarily on three factors ‑ contribution to teaching, research and administrative expertise. It is probably fair to say however that research has played the more prominent part in the decisions of both selection and promotion committees mainly because it is a more measurable activity than teaching or administration
11. Academic staff in universities are appointed to conduct teaching and research by the terms of their contract of employment. In colleges of advanced education a greater emphasis is placed on teaching ability but research contribution also weighs heavily. The terms of a person's employment accordingly contemplate that the person will engage in research during the period spent at the university. A portion of an academic salary can thus be considered as being allocated to the research requirement of his employment. Institutional support by way of secretarial assistance and research assistants are also provided by the institution. While an academic may well write out of hours, a substantial part of his ordinary business hours ought to be spent in conducting research and writing it up.
12. It is not possible when viewing research to draw a clear distinction between contributions to scholarly journals and the writing of books. In some fields law would be a notable example, the writing of a book map be considered to be a greater contribution than journal article writing. This will to some extent depend upon the nature of the book - a. case book or a book written for school students will not rank as highly as a text book. To attain appointment tothe upper levels of academia, the writing and publication of a major work is usually an essential.
13. The foregoing is intended to demonstrate that the reasons why a member of the academic staff of a tertiary, institution chooses to write articles or books is conditioned by a number of reasons, not the least of which is the prospect of advancement in employment with consequent increases in salary. The receipt by an academic of more money from _ book royalties than from increases in salary flowing from advancement based upon the publication of a book would be rare.
14. Committees concerned, with the appointment and promotion of members of academic staff base their decisions on the academic standing of the person concerned. Such academic standing is judged by a number of factors but among them regard will be paid to the extent to which the works of the person concerned are cited in other publications or are quoted in such publications. It is considered a sign of academic achievement that an article by a person is chosen to be reproduced as a chapter in a collection of works on a particular topic. Frequently such volumes of collected works do not result in a payment of royalty to any of the authors involved. Applications for promotion or appointment to a position are likely to contain references by the applicant to the distribution or citation of the applicant's works to students undertaking a course of study in an adamic institution. Such distribution is seen as a commentary on the worth of the material published.
15. Objections to photocopying raised by academics who are concerned that such action is occurring without payment is explicable by a common desire on the part of most persons to obtain a supplementation of their salary. In my experience, however, it would be most unusual for an academic to refuse permission for the reproduction of his work even where no payment is offered provided of course, that the authorship of the work is acknowledged."
There was no challenge to this evidence and I accept it. In doing so, however, I bear in mind that the evidence is general and that it maybe unfair to treat it as applying to each and every case of academic writing. Furthermore, it would plainly be unfair to extend the considerations which it raises without qualification into the field of educational writing for primary and secondary teaching. The promotion of school teachers does not depend upon similar factors and much of the material prepared for schools is prepared by commercial houses who need to make adequate profit. In such cases the copyright is usually in the publisher and not in the individual author. The evidence disclosed an increasing trend towards the supply by commercial houses in the primary and secondary school areas of material, which is intended to be copied. No question of infringement of copyright or a claim for equitable remuneration under s 53H of the Act arises in such cases. The user pays for the right to copy in the price which is charged for the material.
The matters raised by Professor Pearce are important. But the distinctions which exist between persons in the general writing field and persons who write only for educational purposes, and the further distinctions which exist between the school area and the tertiary area, and also within the tertiary area, make it difficult to give effect to the considerations which Professor Pearce raises in an exercise which involves the fixing of a flat fee for all s 538 copying. This is something of which I shall say more later on.
As to the practices of institutions in relation to copying, there was some general evidence of the purposes of such copying. Importantly it was emphasised that most copying was not done for permanent purposes but rather to enable students or pupils to have material for use in a small number of lessons or lectures or for assignments or essays. Sometimes they would keep the material for the balance of the academic year (in school years 11 and 12 perhaps for two academic years), but rarely would material be kept by them for longer. Sometimes libraries copied the whole for part of works which were out of print, and kept the copies on their shelves as part of their ordinary collection. This, however, did not appear to be an extensive practice. The purpose of this evidence was to draw a distinction between the acquisition of an actual book, the life of which might be as long as 5 years during which time it would be used by a succession of students, and photostat copies which had a life usually of no more than a year and often much less. A consequence of this was that the copying might be done for successive classes, say, five times in the course of the 5 year period which represented the life of the book. In the respondents’ submission, if a copyright owner were paid at a rate more than the royalty he received on the sale of a book and copies were made ono sap, five occasions during the life of the book, he would be paid at a rate which was plainly excessive and certainly not equitable.
There was some evidence from authors and publishers of a fear that extensive photocopying of works had already affected sales and would do so increasingly. On the other hand there was substantial evidence to show that there had been a real increase in the earnings of publishers and that sales of works generally had not fallen off. There was an accent in the evidence of some witnesses on the terms of s 53H which do not allow the copping of more than a reasonable portion of a work unless it is out of print. It was said that this was protection to authors and publishers which would prevent a real effect on their sales. Only when a work was out of print could copies of the whole work be made. The response to this by some was that photocopying enabled the teacher or lecturer to pick the eyes out of a work, something which he would not have been able to do if copies of the book had been purchased.
There was a good deal of evidence from the institutions that if they were not permitted to copy for a reasonable price, the quality of education may be affected. All institutions indicated that if the fee was too high a revised attitude towards copying for educational purposes would have to be taken and that this may be disadvantageous to pupils and students generally. Of this matter Professor Pearce said:
"In my opinion, if a high rate of equitable remuneration is fixed, there will be a diminution in the quantity of photocopied material issued to students. There is, as mentioned above, a limit which students can be expected to pay. If portions of works selected from a particular book become more valuable in terms of remuneration to the author than the whole book, the practice will be to prescribe the book. This will of course be subject to the constraints on student capacity to pay that have been set out previously.
If a high rate of remuneration is fixed, there may well be a reversion to the previous teaching patterns adopted in institutions of setting one prescribed text to apply to the whole course. . The effect is then that the available book dictates the form of the course rather thaw the lecturer being able to choose which material he considers most appropriate to be covered in the course. It also restricts the ability to teach by reference to different and differing viewpoints and discourages students from reading around a subject. Alternatively, lecturers will look to alternative teaching aids, for example video and computers, which might be seen as providing appropriate means of communicating the required information."
In the period of almost 4 years that the legislation has been in force, schools under the control of the New South Wales Education Department have done very little s 53B copying. They have been instructed not to copy unless the copying is fair dealing copying or the copying of insubstantial portions of works (ss 40 and 53A) in case the liability for it is so high that there will be a problem financially for the schools or the Department as the result of the decisions to be made in these applications. The position has been otherwise in independent schools and in universities and colleges of advanced education where copying has been extensive. Comparatively little copying is due by colleges controlled by the Department of Technical and Further Education, not apparently for financial reasons, but because the nature of the courses are such as not to make copying very often useful or necessary.
Notwithstanding the wide ranging evidence which was given (I have by no means referred to it all) the only concrete pointers to guide the Tribunal in its difficult task were provided by the tabulations and actuarial evidence to which I have referred. The case was not commenced before a great deal of preparation and thought had been given to it by all parties. Despite the differences in their varying contentions, there was substantial co-operation in its presentation. All parties and witnesses called by them have approached the matter in a constructive way. It is clear that many minds have been brought to bear on the problem. These come from the writing and publishing fields, from government departments of education, from the teaching profession, from universities and colleges of advanced education, from the Department of Technical and Further Education and from the legal profession. The assistance of a distinguished actuary was also availed of. I mention these matters to show what a difficult exercise confronts the Tribunal. If there had been more appropriate or better guidelines than those which the parties have suggested, it is clear that they would have been forthcoming. It is quite obvious that over a period of years, much constructive thought has been given to the problem by a variety of minds from many disciplines and walks of life.
Nevertheless, the best that could be done was to evolve the two sets of tabulations, to which I have referred, and to draw attention to a number of more general matters.
Finally, I: should mention evidence given on behalf of the applicant that its proposed operation as an agent to collect remuneration on behalf of the various copyright owners whose works were copied for educational purposes was available one. Naturally I accept this evidence. Some attempt 'was made by the applicant to lead evidence of what its collection costs would be likely to be. The experience of the Australasian Performing Rights Association, from one of whose executives evidence was led, was drawn on for this purpose, In the nature of things, however the evidence was vague and imprecise. I do not feel able to make any estimate of the applicant's likely collection costs in, say, a year.
The Contentions of the Parties
The applicant's primary submission was that there was, if not a going rate, then a most common fee or charge, for copying in the educational field. The tabulations and actuarial evidence upon which it relied positively established what equitable remuneration should be found. This was subject to two submissions designed to increase the 4 or 5 cents per page which the tabulations threw up. The first of these drew attention to the fact that the operation of s 53B of the Act, in conferring on educational institutions a statutory licence, had deprived copyright owners of the ability to stipulate conditions upon which they, would consent to copying. If this had not occurred, they could have insisted, for instance, upon suitable acknowledgments being made in copies of the sources of the material and.other conditions which might be appropriate in a given set of circumstances. The second matter relied upon was the costs of collection. It was submitted that the amount to be incurred by the applicant in collection costs should be added on to the 4 or 5 cents. In the ultimate submission of counsel for the applicant, the figure to be awarded was of the order of 10 cents per page.
The respondents denied that there was a going rate. They submitted that the most common fee or charge approach was not open and that there were grave difficulties in relying at all on the applicant's tabulations or Mr. Whittles evidence. They did not criticise Mr. Whittles approach, but, as mentioned earlier, challenged the base from which he drew his conclusions. This was principally because of the large number of free permissions of which there was evidence. In their submission, once these were added into the scales, any going rate or most common fee thought to be discernible from the tabulations, needed to be reduced to a figure approaching nil. The respondents contended that their tabulations provided a much more reliable guide, but only as to the ceiling of the amount to be awarded. That was because the royalty approach had to be discounted in their favour to take account of the permanency of a book as opposed to the transient existence of photocopied material. The suggestion made by counsel for the universities and colleges was a figure of the order of .25 cents per page. Counsel for the respondents submitted that it was inappropriate to include any figure for collection costs in the amount to be awarded. They submitted that nothing should be allowed for the copyright owners' inability to stipulate the conditions upon which his work might be copied. In particular they submitted that there were no "moral" rights in Australia and thus no general right to compel the acknowledgment of a work.
In his reply counsel for the applicant drew further upon the analogy of the award of damages in an action for infringement of copyright. He submitted that if the respondents' royalty approach were correct, there should be allowed an amount in the nature of conversion damages which map be awarded in an infringement action under s 116 of theAct. That section provides that the owner of the copyright in a work is entitled in respect of any infringing copy, to the rights and remedies by way of an action for conversion to which he would be entitled if he were the owner of the copy and had been the owner of the copy since the time when it was made
All counsel relied upon a number of general matters. I do I not find it profitable to set them all out, but I have made general reference to many of them in my account of the evidence and I shall refer to some of them when dealing directly with the question of what amount should be fixed by way of equitable remuneration.
The task of the Tribunal is to firm equitable, that is fair, remuneration. The remuneration must be fair remuneration in all the circumstances. As has been seen, the applicant has tied its flag to the masthead of a most common fee or, charge. Its case is not based on a going rate, although at some stages of the development of his case, counsel for the applicant suggested that it was. But there is no going rate. The applicant's tabulations establish a. substantial variation in the prices charged for copying. The range is from 1 cent to at least 10 cents. It is more if one divides some flat fees charged for some permissions by the number of pages copied.
The most common charge approach is certainly a permissible one. But the question is whether the applicant's evidence has established that there is a most common charge and that it provides a reliable guide to what fair remuneration in all the circumstances is. If one accepts the tabulation at face value, it does suggest that the majority of permissions for which a fee was charged, were charged for at 4 or 5 cents per page. But the majority, even if one ignores inflation, and takes Mr. Whittle's graph 2C as a guide, is not substantial. Many permissions were charged for at 1 cent. A substantial number of others were charged for at the rates of half a cent and 2 cents per page. If one does take inflation into account, as the applicant contends should be done, the majority in favour of 4 to 5 cents is even narrower.
Furthermore, the evidence discloses that a number of permissions granted in 1983 and 1984 were charged at 1 or 2 cents per page. These were not per page charge permissions but flat fee permissions which, if divided by the number of pages in question, yield 1 or 2 cents. The fact that charges of 1 and 2 cents per page were being made at a comparatively recent time suggests that it would be wrong to leave them out of account in an exercise designed to determine fair remuneration.
There are other considerations militating against the acceptance of the applicant's primary case. Seventy-four instances of copying is an insignificant number compared with the number of instances of copying that have taken place: Evidence of the extent of copying in a number of institutions, particularly in the universities and colleges, shows that vast numbers of works have been copied since the provisions of s 53B came into force. The fact that these were not the subject of a charge is, for the most part, explained by the fact that the institutions, having a licence to copy, were not infringing copyright. The Act entitled them to go ahead and await a request for payment by the various copyright owners. In question in the case is the amount they should be obliged to pay. It would seem to me to be wrong to let a very small number of permissions which were granted control what should be charged all institutions. To adopt completely what the applicant's tabulations disclose wouldinvolve accepting what some few institutions have agreed to as governing the whole spectrum. In my view that is a dangerous course, particularly when the likelihood is that the institutions have been quite uncertain as to what should be paid and are looking to the Tribunal to tell them what the amount should be.
These cases are quite different from the determination of medical fees. The relevant tribunal did, some years ago, adopt a most common fee approach. But it had the benefit of an ongoing situation in which doctors were charging for their services. Services were not given for no charge nor on the basis that no charge would be then made for them but that at some later point of time patients might have to pay a reasonable fee for them. In such a case the tribunal could confidently act upon the then current practice as to charging, just as an industrial tribunal when making a first award will take as a starting point what employees are being paid at the time of its deliberations. Here the situation is quite different. The institutions have not been called upon to pay. They have not paid except in the minority of cases referred to in the tabulations. They should not be bound by what was done in so few cases.
The respondents contended that another reason why the applicant's approach should be discarded was because of the large number of free permissions which were given expressly. As earlier mentioned, there was evidence of some 200 cases in which permission had been asked for and no charge had been made. A number of matters were relied upon by the applicant in response to this submission. Some of the free copping was said to have been done pursuant to s 53A, the provision dealing with copies of insubstantial portions of works, so that no charge was made because none was payable. Some institutions disclosed special circumstances where it was, quite understandable that no charge would be made. Still others involved works which were out of print. These and other matters relied upon by the applicant need to be taken into account. But even if they area there remains the fact that in a number of cases no charge was made. That circumstance cannot beignored even though it may be discounted for the various reasons relied upon by the applicant.
For these various reasons I would therefore reject the applicant's submission based on a most common charge approach.
Notwithstanding this conclusion, I do not think that I should put aside the applicant's tabulations. They are evidence of actual charges made for copying in an educational setting in recent years. They give guidance, however careful one has to be in giving them too much weight, as to the range within which charges were being made and paid in relevant transactions. They are thus of help in directing one to the area in which one needs to be to determine the outcome of the applications.
Thenthere are the respondents' tabulations. These were not designed to show that there was a going rate. Rather, they were advanced as an indication, not only of the appropriate level of remuneration to be awarded, but to establish a ceiling above which an award should not be made they were based on an author's entitlement to royalties. That was usually 10 per cent of the retail selling price of the book. In the respondents' submission it would be unfair to award a figure which would yield authors a sum larger than a proportion of the royalty based on the number of pages copied. That was particularly so when one took into account the contrast between the permanency of a book which might have a life of 5 years, and the impermanency of a photocopy, the life of which would, in most cases, be quite transient. In the course of the life of a book its pages might be copied many times. If the royalty approach were not adopted, the author might earn many times the amount of it for the copying of comparatively small parts of his work. A fortiori would that be the case if the work were out of print and the totality of it were copied.
I think there areproblems about the royalty approach.. A royalty of 10 per cent is usually paid in respect of the runs of hardcover books which are published. Greater remuneration, although the amounts or percentages vary considerably, is usually paid for other rights, including reproduction for paperback editions. The publisher's proportion of 90 per cent is no doubt justified by many factors. The base is the retail selling price.
The publisher does not receive 90 per cent of this. I do not think any evidence on the point was led, but I would expect a retailer's mark-up to be of the order of 80 to 100 per cent. If that be so, the publisher's proportion is of the order of 40 or 50 per cent (or less if a wholesaler is interposed between publisher and retailer) as compared with the author's 10 per cent. Furthermore, it is the publisher who takes the risk. Publishing costs are high. No doubt a minimum number of sales have to be made to make the publication worthwhile. Only if it is, is it likely that the book will become sufficiently well known and well regarded for educators to seek to use it in their teaching. However, once that point is reached different considerations begin to arise. The author may then expect to receive a greater proportion of gross amounts paid for other uses to which his work is put. It would seem to me to follow that what he would receive by way of royalty on the sale of a hardcover copy of his work may not provide the best guide to what he should receive if his work is photocopied. I say what I have not unmindful of the fact that it is the work, that is the book, from which copies are made.
There are more fundamental considerations. No purchaser or a book concerns himself with the fact that 90 per cent of the retail selling price goes to the publisher and retailer and 10 per cent to the author. For him the only question is the cost of the book. That is its value. In my opinion the fallacy in the respondents' royalty approach lies in discarding 90 per cent of the value of the book which is copied. The author has to have a publisher or incur publishing and marketing costs himself. In ordinary circumstances, in order to market his work, he has to agree to a 10 per cent royalty at least in respect of the initial runs of it. In a sense the 90 per cent taken by the publisher and retailer is the cost to the author of getting his work into bookshops. How in those circumstances it could be equitable to calculate the remuneration payable in respect of the copying of his work upon the basis of his royalty alone, I do not understand. To do so would be to ignore what in truth the author himself has had to expend to transform his work into a marketable commodity and thus into a form from which it may be copied. If the respondents' royalty approach has validity as a guide to what should be done, the only fair way of applying it is to take the price or value of the book as the starting point, although I myself would be inclined to think that it should be the wholesale price and not the retail price. Strangely, if the retail price is used, it would yield figures of 4 or 5 cents per page, figures which the applicant's tabulations disclosed were those most commonly charged.
A further matter reinforces me in thinking that the view I have of the respondents’ royalty approach is correct. There are not an insignificant number of examples in the evidence where the publisher is the copyright owner. In such cases he has commissioned the work on the understanding that he, and not the author, will own the copyright. I do not think that it could be right, in cases of that kind, to take as a starting point the amount which the author, if he had been the owner of the copyright, would have earned by way of royalty on the sale of the work. If the respondents’ approach is incorrect for these cases, I think that it must also be incorrect for all other cases.
The way I have approached the matter may at first sight be thought to have about it something of the aura of conversion damages, a matter with which I shall deal separately. But I do not believe this to be so. It is based on considerations of fairness. Conversion damages are thought sometimes to lead to damages which are more than compensatory. But the matters I have thought relevant need, in my opinion, to be taken into account to correct the otherwise unfair consequences which the respondents' tabulations would have. In an infringement case one would not be in the realm of penal damages if one took as a starting point the whole value of a book the copyright in which had been infringed by unlawful reproduction. In short I do not believe that an approach which took account only of a fraction of that value could lead to an equitable result. As earlier mentioned, the writer and publisher witnesses asked about this were in some cases taken by surprise I do not find it useful to refer to their answers, but it seemed to me that the response they endeavoured to make was based on considerations such as I have mentioned.
For these reasons I reject the respondents’ royalty tabulations as reliable guides to what equitable remuneration should be found or as establishing a ceiling above which no award should be made. Nevertheless like the applicant's tabulations, they have their place. They draw attention to what an author earns by way of royalty, and, within limits, they tend to guide one to the range of figures within which equitable remuneration will be found.
I should pause to sap that in making the criticisms I have of the parties' attempt to find guidelines, I do not wish to be thought ungrateful for the assistance which has been proffered. I hope I am sufficiently aware of the difficulties the parties must have had in formulating a yardstick. Obviously much time and thought went into the preparation of the two sets of tabulations. I would have liked to have found them of more direct assistance than I think can be derived from them, but I am afraid to do so would lead to an unsatisfactory result.
I now go to some other matters. One of the difficulties of the present task is to arrive at an across the board figure. The Committee on Reprographic Reproduction considered recommending legislation which would provide for a flat remuneration for each instance of copying. Its members had various views about it which are inconclusively referred to in the Report; see paras 6.42 ‑ 6.47.
The difficulty is to fix on a rate which is fair to all parties in all circumstances for all copying in educational institutions. Earlier I referred to the fact that some authors write to further their careers. It is something which they are expected to do. They have an interest in their works being read and referred to by others. That interest is not the economic interest they might have in financial gain to be made from the copying of some pages of their work. It is the interest they have in maintaining and furthering their academic standing and in achieving promotions and appointments. In a given case where these circumstances prevailed, one might take these matters into account in determining fair remuneration. But it is very difficult to have regard to them in an exercise which involves the fixing of the same remuneration for authors who write generally and whose works only find some of their use in the educational field and for other authors or publisher copyright owners who, although they write and publish only in the educational area, do so purely for commercial reasons. In such cases there is no warrant for discounting remuneration which would otherwise be payable. I have given the matter considerable thought, but I do not feel able to take into account matters such as were urged by Professor Pearce in the quotation from his evidence earlier set out (pp 35‑37).
Another problem relates to works out of print. There could be said to be a case for a lower per page rate for copies of these works than for copies of extracts from other still available works. The author would not be expecting further remuneration from out of print works. The payments would, in a sense, be a windfall. One might well expect persons bargaining in such a situation to agree on a lesser price. On the other hand, if photocopying of out of print works became extensive, it is possible that reprintings and new editions may be discouraged. However, I do not think this is likely because the copying of the whole of a work by a reprographic method can be a most expensive process. No submission was made advocating a lower rate for out of print works. It is true that I could myself suggest it. But I am loath to do so in the absence of evidence on that matter and of submissions by the parties on the question.
Then the fixing of a single rate takes no account of the relative worth of different works. Some copying, especially in the school area, is of quite rudimentary and substantially unoriginal material. It may be of compilations, diagrams, maps or exercises which are well known, but which are conveniently set out in a work which is the subject of copyright. On the other hand there is also copying of work which discloses much original thought and is highly regarded. If one were able to make an independent assessment of what remuneration should be determined in respect of each of these types of work, it is likely that the results of the two cases would be different. But in the way the case has been presented, it is not possible to make an award which allows for the difference between the two classes of case. Furthermore, the two examples I have given are themselves extremes between which there would be an infinite variety of circumstances and cases no one precisely the same as any other. I note that in Denmark and Norway, where there are reprography collecting societies, different rates are set in some cases. For instance, in Norway the 1982, per page rate for poetry was double that payable for other works except in the case of music for which the rate was five times the ordinary rate.
Finally, whilst I am in this negative vein, I should deal with conversion damages and. the question of attribution. As to the former, I have already referred to the terms of s 116 of the Act. The applicant seeks to rely on it because, by analogy, the approach is akin to obtaining an appropriate figure for damages where copyright has been infringed. It is well recognised that the application of s 116 can lead to the awarding of damages which are more than compensatory; see Infabrics Limited v. Jasrtex Limited 119823 A.C. 1, per Lord Scarman at p. 26 and N.H. Brine Co. v. Whitton (1981) 37 A.L.R. 19Q, per Fox J. at p. 200.
I have reached the conclusion that in most cases it will be inappropriate to draw on s 116 of the Act for the purpose of determining the, equitable remuneration to which a copyright owner is entitled. There is no legislative warrant for such a course. It is the Tribunal, not Parliament, which has used the analogy of the measure of damages in infringement actions. But the Tribunal is not justified in pursuing that analogy if it leads to remuneration which is excessive
I turn to the question of attribution. It will be remembered that counsel for the applicant sought to increase the amount to be awarded by reference to the fact that in cases where licences to copy were granted voluntarily, the copyright owner could seek terms upon which the licence would be granted, one of which would very often be that the copy bear an acknowledgment of the work and the author of it. The detail of the evidence regarding the permissions shows that publishers, acting on behalf of.authors, often make this a condition of the grant of permission. It map be thought strange that the legislature did not see fit to include attribution as one of the conditions upon which the statutory licence provided for in s 53B would be granted. But it did not.
In the course of the argument, I expressed concern about this matter and suggested, tentatively, that there might be a case for the amendment of the Act to require an acknowledgment of the work and the author to be a condition of the existence of the statutory licence. I have not thought this proposal through sufficiently well to make the recommendation firmly, but I do think it is a matter that should be considered. It is a matter which falls within the current reference to the Copyright Law Review Committee on Moral Rights.
I am satisfied that the governing bodies of universities and colleges take great care to see to it that members of their academic staff copping material do make suitable acknowledgments of the sources of work which is copied. I do not say that these instructions are obeyed invariably; but I think they usually are and I do not think this is a problem in the tertiary area. It is a problem in the primary and secondary area as the evidence of some of the witnesses showed. In the upshot, however, I have not included any allowance for the inability of the copyright owner to impose a condition that his work and his name be acknowledged. My reasons for not doing so are principally that any such allowance would be very difficult to quantify and could only be minimal and that the unevenness of practice as to acknowledgment makes it difficult to take the matter into account when the figure to be determined is to be the same for all copping whether acknowledged or not. I think the better course is to recommend consideration of the amendment of s 53B to require acknowledgment as a condition of the statutory licence. As I have said, this matter is under consideration by the Copyright Law Review Committee.
I would hope that I can now bring to bear a more positive approach to the question of the amount to be awarded. I mention a number of matters which I have used as guideposts, some favourable to the applicant and some favourable to the respondents. The exercise is one of balancing a variety of considerations and coming to conclusions as to the weight each should be given.
In an ordinary case one would commence with collection costs. It is quite reasonable for copyright owners to appoint an agent. The copyright owners here have done so. It may be expected that many other copyright owners will do likewise. I am satisfied by the evidence that the applicant will act as the principal collector of remuneration payable under s 53B. But it is not possible at this stage to award any precise figure in respect of collection costs. There is no experience to enable them to be quantified. What I have done is to take the matter generally into account and to endeavour to provide for it in the overall figure which I have determined. The allowance I have made is small.
Then I think it relevant to take into account the circumstance that copying map be discouraged if the figure awarded is excessive. This would work to the disadvantage, not only of both authors and the educational institutions, but also of the public, because lecturers and teachers may not be able to make use of much material that desirably should be freely available to students and pupils. This point was made by a number of witnesses including Professor Pearce and Miss Martin an inspector of schools in the employ of the New South Wales Department of Education.
I should make clear, however, the basis upon which I have taken this matter into account. I have not taken it into account because of the effect that there may be on the interests which I have mentioned. I have taken it into account because I believe that if the parties in question were negotiating, they themselves would take it into account. Indeed, there is evidence to show that publishers did have regard to it when determining some of the charges referred to in the applicant's tabulations or when determining that no charge should be made. What I wish to emphasise is that I have not taken into account any circumstance for factor which would tend to reduce the remuneration payable simply because of the large liability that educational institutions map face as a result of this case. To take such a matter into account would be to bring about the subsidisation by authors of education in the community. It is not for them to have to subsidise education. That is a matter for governments. Really, all I am doing is making it clear that the figure has to be fair and. reasonable. It must not be extravagant or excessive. The taking into account of this factor leads to no more than this. Another factor tending to reduce the amount to be awarded is the transient nature of the material which is copied. Except in some cases where works have been fully copied because they are out of print and remain, more or less permanently, on library shelves, photocopied material has no lasting use. It may be kept by students or pupils for, at most, a year or a little longer. If it is needed for other pupils, it is copied again. It may be expected that well known works used by some lecturers and teachers will be copied many times and thus will provide a source of revenue to the authors of the material every time this occurs.
Then there are in the background the guideposts provided by the return authors may expect to receive for their work whether by way of royalty or otherwise. These led to the more specific figures in the respondents' tabulations which I think, despite my criticisms, have a general background relevance. The same is true of the applicant's tabulations. I think I can safely take the view that the tabulations taken together point to the range within which the determination should be made. The number of instances in both sets of tabulations is few. But the applicant's tabulations show that transactions were entered into within the range of 1 to 10 cents, or somewhat more, if one takes account of some of the flat fees which were paid. My criticisms of the tabulations remain. But those criticisms do not destroy completely the guidance which is to be derived from them. I take no more from them than that in a comparatively few cases parties did enter into transactions within the range of figures which they disclose. I bear in mind the large number of free permissions that were given and the fact that in the great majority of cases no permission was sought because there was a statutory license to copy. The respondents' royalty tabulations must be weighed in much the same way. Again, my criticisms of them must be borne in mind but, as I have earlier said, they remind one of what an author usually receives by way of remuneration. I emphasise that the tabulations are principally relevant for the guidance they provide as to the range within which the determination should be made. The relevance they otherwise have is not significant.
In the end the task calls for a valuejudgment - "judicial estimation" .in Lord Wilberforce's words. I have found the exercise extremely difficult. In a judicial experience one encounters many problems of estimation and the making of value judgments. I instance some cases in the field of industrial arbitration involving difficult questions of what should be awarded for salaries or wages or for allowances in respect of various matters. Assessments of damages, both for personal injuries and in complex commercial cases, can pose questions of great difficulty. Yet other cases are concerned with the valuation of property, such as shares as in the St. Helen's Farm case earlier referred to. I know that there is a tendency for judges to regard the instant case as the most difficult simply because it is the one to be decided, but on reflection I confess that I have found this case poses as intractable a problem in the area of evaluation as any I can remember so far encountering. That is because of a lack of a market and a lack of any satisfactory guidelines as to what the outcome should be. It also stems in part from the broad based approach which the parties wish the Tribunal to take. In the background is the anxiety hat the figure, if too high, and thus unfair, may operate adversely because it map paradoxically deny to authorise the remuneration s 53B intended them to have and also deny to educational institutions the ability to use as wide a range of material as they should. All in all the task is a most difficult and responsible one.
I do not feel able to give further reasons for my decision. I must come directly to the task of judicial estimation which is involved. I have paid attention to a. number of factors, some negative and some positive, in the way and to the extent my reference to them indicates. I have not mentioned the whole of the evidence nor every factor I have taken into account. Having done the best I can, I have reached the conclusion that an appropriate award is 2 cents per page.
Some Final Matters
before I conclude I wish to mention some additional matters which do not bear on the outcome of the case. Firstly, I emphasise that the amount of 2 cents which I have fixed is not to be confused with the cost of copying often paid by students or pupils in libraries or for material distributed to them in lectures or classes. That is not what this case is about. Those charges are made to recover the cost of the copying made up of the cost of using copping machines, paper and the staff time involved. Whether some institutions may see fit to add on the cost of this award is not a matter which it is relevant for me to consider.
Next, I should mention reference which was made in argument to the copying of work from anthologies. There is apparently thought to be a difficulty when, for example, a poem, is copied from an anthology of poetical works of a poet or a number of poets. Is the work the anthology, so that the copying of one poem is the copying of no more than a reasonable portion? Or is the work simply the poem with the consequences that it may not be copied unless it is out of print? I do not need to grapple with these questions. They do not bear on the amount to be awarded. I have two suggestions to make. One is that a series of concrete examples be selected and that an application for declaratory relief be made to a court of appropriate jurisdiction to determine the questions and give formal guidance on the matter. The other is that submissions by those who encounter difficulty be made for the amendment of s 53B so that it will make clear what the position in relation to copying from anthologies is intended to be.
I have earlier referred to evidence of fears by authors and publishers that photocopying is rife and is also affecting sales of their works. I am satisfied that these fears are sincerely and genuinelyheld. I am unable to say positively that they are groundless. I do say that I am inclined to think that they are because of evidence which there is which suggests that book sales are increasing. I would add that had I been positively satisfied that photocopying was causing loss of sales, it would have been very difficult to give the matter substantial weight. The problem would rather have been overcome by the award of equitable remuneration and the taking of steps to see that it was collected. In the result I have not taken this matter into account at all.
Finally, there was some evidence, particularly from Mr. Banki, about overseas practices. I have considered these but do not regard them as helpful in the task which confronts me. Nevertheless, I am grateful to have been referred to the evidence if for no other reason than that it shows that there was no helpful overseas experience to be drawn upon.
My determination is 2 cents per page for each page copied pursuant to s 53B of the Act. I would hope that this decision may form the basis for some sensible and on-going discussion and negotiation about the problem. As time passes, the parties will gain experience of what is involved. They may be able to differentiate between different categories of copying. Actual collection costs will become known. Any detrimental effect to any party as the result of remuneration at a particular level will be revealed. At the end of a period of a year or two the parties themselves may well agree on a revised figure or figures which will be arrived at with the benefit of the experience they will then have had.
I do not propose now to make formal orders. The matter will be stood over to enable interested parties and their legal advisers to consider what I have said. When the matter is again in the list counsel for the applicant should bring in short minutes of orders to give effect to my decision. I understand that by agreement there is to be no order as to costs.
I certify that 43 preceding pages are a true copy of the reasons for decision herein of the Copyright Tribunal
Associate to President
Dated 20 March 1985