COPYRIGHT TRIBUNAL OF AUSTRALIA
CT1 of 2017
GREENWOOD J (PRESIDENT)
Date of decision:
Copyright Act 1968 (Cth), ss 153K, 182B, 183, 183A, 183C
8 August 2018
Date of last submissions:
8 August 2018
Number of paragraphs:
Solicitor for the Applicant:
Banki Haddock Fiora
Counsel for the Respondent:
Mr R Cobden SC with Ms P Arcus
Solicitor for the Respondent:
The Crown Solicitor
COMMONWEALTH OF AUSTRALIA
Copyright Act 1968
IN THE COPYRIGHT TRIBUNAL
COPYRIGHT AGENCY LIMITED (ABN 53 001 228 799)
GREENWOOD J (PRESIDENT)
DATE OF ORDER:
2 NOVEMBER 2018
THE TRIBUNAL DIRECTS THAT:
1. Each party file and serve statements of evidence, other than expert evidence, in relation to the field of issues relevant to the proceeding determined by having regard to the applicant’s position paper dated 6 March 2018, the respondent’s position paper dated 20 March 2018 and the document described as Parties’ Agreed and Disagreed Contentions Paper dated 5 April 2018, by a date to be agreed between the parties and failing agreement, by the Tribunal (the “lay evidence”).
2. Each party file and serve a statement in response to the lay evidence by a date to be agreed between the parties and failing agreement, by the Tribunal.
3. Each party file and serve statements of expert evidence in relation to those matters properly the subject of expert evidence in connection with the field of issues relevant to the proceeding determined by having regard to the applicant’s position paper dated 6 March 2018, the respondent’s position paper dated 20 March 2018 and the document described as Parties’ Agreed and Disagreed Contentions Paper dated 5 April 2018, by a date to be agreed between the parties and failing agreement, by the Tribunal (the “expert evidence”).
4. Each party file and serve a statement in response to the expert evidence by a date to be agreed between the parties and failing agreement, by the Tribunal.
5. Each party has liberty to apply on three days’ notice.
GREENWOOD J (PRESIDENT):
1 These proceedings are concerned with important procedural aspects of the principal application filed by Copyright Agency Limited (“CAL”) to which the State of New South Wales is the respondent.
2 CAL is a collecting society within the meaning of Div 2 of Pt 7 of the Copyright Act 1968 (Cth) (the “Act”). It has three categories of members: author members, publisher members and visual artist members. At least as of 5 March 2018, there were 22,416 direct author members; 8,496 direct publisher members and 9,122 direct visual artist members. CAL makes the principal application in its capacity as a declared society in respect of “government copies” in relation to all relevant works and as agent for the parties listed in Sch A to the application in respect of communications to the public of those members’ works. There are 28,124 parties listed in Sch A to the application comprising 19,838 author members; 371 author/publisher members and 7,915 publisher members.
3 Section 183(1) of the Act provides, relevantly, that the copyright in a literary, dramatic, musical or artistic work or a published edition of such a work or in a sound recording, cinematograph film, television broadcast or sound broadcast, is not infringed by a State, or by a person authorised in writing by a State, doing any acts comprised in the copyright (in the subject matter so described) if the acts are done for the services of the State.
4 Section 183(4) provides, relevantly, that where an act comprised in a copyright has been done under s 183(1), the State shall, as soon as possible, inform the owner of the copyright of the doing of the Act unless it appears to the State that it would be contrary to the public interest to do so, and shall furnish the owner with such information as to the doing of the act as the owner from time to time reasonably requires. Section 183(5) provides, relevantly, that where an act comprised in a copyright has been done under s 183(1), the terms for the doing of the act are such terms as are, whether before or after the act is done, agreed between the owner and the State or, in default of agreement, as are fixed by the Tribunal.
5 However, ss 183(4) and (5) do not apply in relation to a “government copy” (whenever it was made) where, put simply, a collecting society is relevantly engaged: s 183A
6 Where s 183(5) does not apply to government copies made in a relevant period for the services of a government (the State of New South Wales in this case), the government (State) must pay the relevant collecting society, in relation to those copies (other than excluded copies as that term is understood by reason of s 183A(6)), equitable remuneration which is worked out for that period using a method either agreed upon by the collecting society and the government, or, where there is no agreement, as determined by the Tribunal under s 153K.
7 Section 153K provides that a collecting society or a government may apply to the Tribunal for an order determining the method for working out remuneration payable under s 183A(2) for government copies made for the services of the government in a particular period. The necessary parties to the application are the collecting society and the government (State). After affording each party procedural fairness in the presentation of its case, the Tribunal must make an order determining the method. Such an order may also specify how and when payments of the amount worked out, using the method so determined, are to be made: s 153K(3) and (4).
8 As to the method, s 183A(3) provides that the method of working out equitable remuneration payable to a collecting society in respect of government copies (other than excluded copies) for a period must take into account the estimated number of those copies made for the services of the government during the period (relevantly engaging the collecting society), and the method adopted for working out equitable remuneration must specify the sampling system to be used for estimating the number of copies. The specified sampling system is to be used for estimating the number of “government copies” made for the services of government during the period as an element of the method of working out the amount of equitable remuneration payable by the State to, in this case, CAL in respect of government copies.
9 The term government copy means a reproduction in a material form of copyright material made by, relevantly, the State under s 183(1): s 182B(1). Section 182B(1) contains a definition of copyright material identifying six categories of subject matter.
10 The method of working out the equitable remuneration payable by the State may provide for different treatment of different kinds or classes of government copies.
11 Equitable remuneration payable to a collecting society under s 183A(2) must be paid in the manner and at the times specified by the Tribunal, consistent with s 153K(3), in circumstances where agreement is not reached between the State and the collecting society.
12 Certain powers are conferred by the Act on a collecting society to carry out sampling. Section 183C, which contains those powers, applies in circumstances where a method of working out equitable remuneration payable under s 183A(2) has been agreed between the government and the collecting society, or where the method has been determined by the Tribunal. Assuming a method of working out equitable remuneration under s 183A(2) has been established by either of those mechanisms, a collecting society may give written notice to the State that it wishes to carry out sampling in accordance with the method so determined during a specified period at specified premises occupied by the government. Section 183C(3)-(6) contains protocols relating to that matter.
13 So, in the principal application, CAL applies for orders under s 153K for the determination of the method for working out equitable remuneration payable under s 183A(2) for government copies in relation to all relevant works, in its capacity as a declared collecting society. It applies as agent for all of the parties listed in Sch A in respect of communications to the public in respect of the works of all of those members.
14 It seems that views differ as between CAL and the State as to the proper construction of aspects of these provisions. I have simply described the statutory framework for the purpose of putting into context the procedural questions which presently arise for determination. I am perfectly happy to hear submissions about the proper construction to be adopted as to these provisions and, in particular, views about the proper approach to be adopted as to the construction of and scope of s 183C of the Act.
15 There is a considerable pre-history to the relationship between the State and CAL concerning agreements and arrangements for the payment by the State to CAL of remuneration for the State doing acts comprised in the copyright in the subject matter described in s 183(1) of the Act, done for the services of the State. Those acts seem to comprehend both the making of government copies (which seems to be confined to the reproduction right) and any other exercise of an act comprised in the copyright falling within the scope of s 183(1) of the Act.
16 It is uncontroversial, at least as a question of fact, that the State and CAL entered into the following remuneration agreements: an Agreement on 14 March 2005; an Interim Rate Agreement on 24 July 2009; and a Remuneration Agreement on 1 July 2010. The 2010 Remuneration Agreement expired on 30 June 2012. At the date of expiration of that agreement, the agreed rate for remuneration payable by the State for the period 1 July 2011 until 30 June 2012 was calculated according to a formula of a flat annual rate of $11.22 per each full time equivalent employee (“FTE”). CAL says that, to the best of its knowledge, as at the date of making its application to the Tribunal, the State had approximately 324,477 FTEs. On that basis, the “flat annual rate” would amount to $3,640,631.94. Since the expiration of the 2010 Agreement on 30 June 2012, almost six and a half financial years have elapsed: 30 June 2013, 2014, 2015, 2016, 2017, 2018 and 31 December 2018. On that footing, the remuneration would amount to $23,664,107.60. In January 2016, the State made a payment towards past and prospective liability for equitable remuneration under the provisions of the Act of $1.5 million. I mention these figures simply because it gives some sense of the scope of remuneration at one end of the contended spectrum. Of course, the State contests entirely the utility of the flat annual rate of $11.22 and all other aspects of that calculation. It says that those arrangements were not, in any sense, a reflection of equitable remuneration according to a method reflecting the integers of the statutory framework (which is the present question in issue). CAL says that the State has proposed that the correct rate now is $1.73. If that rate is applied as a flat annual rate in circumstances where an assumption is made that the number of FTEs remains the same (324,477), the flat annual amount would then be $561,345.21. If that flat annual amount is postulated across six and a half financial years, the amount would then be $3,648,743.86. As earlier mentioned, the State has made a contribution to past and prospective liability for equitable remuneration of $1.5 million, and on that view, equitable remuneration remaining to be paid as the contended amount payable for the period would be $2,148,743.86. Again, I mention these matters simply to give some indication of an amount at the other end of the spectrum.
17 The Tribunal is now called upon to determine the method for working out remuneration payable under s 183A(2) for government copies. The method must take into account the estimated number of copies made for the services of the government during the relevant period and the method must specify the sampling system to be used for estimating the number of copies. Accordingly, the Tribunal will be required to hear evidence about and determine an appropriate sampling system.
18 As part of the pre-history, the parties have not only been involved in negotiations about all of the relevant integers going into the question of determining a sampling system, the estimation of copies and the relevant rate, but they also participated in a mediation in June 2018 which, unfortunately, proved to be unsuccessful. As to the questions in issue in the principal proceeding, the applicant has formulated a position paper which sets out 68 paragraphs in which CAL sets out the history of engagement with the State; its conception of the statutory framework; the particular position which prevailed between 1997 and 2003; aspects of the Nielsen Company surveys; steps towards the formulation of a new survey to determine an estimate of the relevant number of copies; the implications of the agreements from 2005, 2009 and 2010; events relevant to the period from 2012 to the present and, particularly, aspects and criticisms of a survey undertaken by the State especially criticisms reflected at para 33(a) to (n). The position paper also suggests that CAL will give detailed evidence of the basis for its objections to the State survey. It will also give evidence about arrangements arising out of a meeting on 15 September 2015 which CAL describes as the “handwritten agreement”. CAL would seek to give evidence about the context within which it entered into that arrangement and especially the matters described at para 36(a) to (d). In the position paper, CAL sets out its view about the State’s contended failure, in any event, to comply with the terms of the 2015 handwritten agreement for Phase 2 of the State’s survey. CAL sets out observations about the utility of the “logging method” implemented in the Nielsen surveys. CAL also sets out its views about arrangements struck with all other States, Territories and the Commonwealth in relation to payments for government copies. CAL then sets out propositions in relation to the communication right and at para 62, it sets out the topics upon which it will give evidence in relation to that matter.
19 I mention all of these matters because CAL has scoped out its conception of the questions in issue to which evidence will be addressed in the form of lay evidence and, necessarily, expert evidence.
20 The State has also filed a position paper of 100 paragraphs in which the State responds to each of the paragraphs of CAL’s position paper and then asserts its own contentions. In respect of a number of the paragraphs, the State says that it does “not dispute” assertions contained in paragraphs of CAL’s position paper presumably with a view to making it clear that those matters are not put in issue when it comes to the Tribunal determining particular questions as an element of determining the relevant method.
21 It is not necessary to canvas the various contentions of the State in its document. It is sufficient to note that with the exception of those matters which are not put expressly in issue, the State contests each of the central allegations set out in CAL’s position paper and then asserts its own conception of the proper context within which aspects of the pre-history are to be viewed and its own conception of the evidence which will need to be called to address the statutory integers. For example, the State says that it will give evidence analysing the “Survey Data” arising out of its own survey and the methodology underlying the State’s proposed remuneration rate of $1.73 per FTE per annum. The State intends to rely upon the survey and says that it will give detailed evidence as to its design, consultations between the State and CAL, the contended agreement between the State and CAL concerning the Phase 2 questionnaire and evidence about the survey results. It also says that it will give detailed evidence in relation to “facilitated meetings” in September and October 2015, the so-called “Facilitation Agreement” and the handwritten agreement.
22 The issue that now arises is the adoption of the best method for advancing these matters to resolution before the Tribunal. Two things should be noted. First, the Australian government has now completed its appointment process of personnel to positions within the Tribunal including the re-appointment of the President of the Tribunal. Shortly, I will convene a panel to be in a position to hear and determine this matter next year. To date, interlocutory and procedural matters have been addressed by me. Second, it is important to try and determine these matters by, say, 30 June 2019. By then, seven financial years will have elapsed from the end of the 2010 Agreement on 30 June 2012 and although the State has made a payment of $1.5 million towards past and future liability for statutory equitable remuneration, the collecting society and the many applicants in relation to the communication right need to have the outstanding remuneration questions finally resolved.
23 I have carefully examined all of the issues raised by the application and the two position papers. I also note that the parties have formulated a paper entitled Parties’ Agreed and Disagreed Contentions. These documents comprehensively scope the field of questions in issue relevant to the Tribunal’s determination of the method reflecting all of the statutory integers which need to be taken into account.
24 As to the immediate conduct of the matter, the State, put simply, says that CAL, as the moving party, should first put on its evidence about its proposed method and especially its proposed sampling system to be used for estimating the number of government copies. The State says that it would then respond to that formulation of the method. It also says, put simply, that CAL as the moving party, should put on whatever evidence it considers appropriate and the State will respond to it. The State will then put on its own material and statements in reply can be put on by CAL. The State says that expert evidence about the design of the relevant method and its features should be put on and the State will then respond to that. The State says that it should be provided, perhaps on a confidential basis, with any relevant information going to surveys and other documents relevant to CAL’s application and the State will then respond to it.
25 CAL says that the parties should put on their lay evidence now. It also says that the most efficient way to approach the matter is for a single expert to be retained (appointed by the Tribunal) to give evidence in relation to the design and implementation of a survey. To that end, CAL has suggested that each party provide the other party with a list of three experts qualified to give the evidence and that an expert be selected. It suggests that additional expert evidence might be required but says that the parties can put on that evidence to the extent that they wish to contest the design and formulation of the method proposed by the initial single expert.
26 Having considered all of the submissions of the parties and the detail of the position papers in each case and also the issues raised by the agenda document for the case management hearing formulated by the State, I am satisfied that the parties have each deconstructed the field of issues which need, in their view, to be addressed in terms of the evidence they would wish to put before the Tribunal in support of their various propositions. The field of the lay evidence has been thought about in some considerable detail and the field of that evidence is well understood to each side. In addition, the parties understand that an essential element of the method to be adopted in working out equitable remuneration is specifying the estimated number of government copies during the relevant period and, inherent in that exercise, is an analysis of approaches to designing a sampling system to be used for estimating the number of copies. That sampling system needs to be specified as the mechanism which enables the estimated number of copies to be taken into account in working out equitable remuneration as an outcome of the deployed method. There seems to me to be no reason why the parties cannot begin to assemble expert evidence about all of these elements. I am not persuaded that matters are necessarily best advanced by nominating a single joint expert. That seems to me to be so because it is almost inevitable that each of the parties will be likely to engage their own expert to critique aspects of the method and particularly the sampling system. So, it seems to me that the most useful thing to be done to advance the matter is that the parties should each individually work up the body of lay evidence they wish to put on addressing the issues as they understand them to be. Each side will put on its evidence advancing its own propositions and no doubt that evidence will seek to answer and address the issues propounded by the other side which need to be addressed, if they are not admitted. I see no reason why the parties cannot now retain an expert to provide expert evidence about the design of a sampling system. Each side can work up, with their expert, a preferred model of a sampling system and the expert evidence will no doubt deal with the manner in which the method will take account of the sampling system and the manner in which a model would produce a remuneration outcome which is probably characterised as equitable remuneration. No doubt the parties will put on evidence going to those matters which they say need to be taken into account in determining a qualitative judgment about what is fair or reasonable in all the circumstances, that is to say, the factors that determine why a particular level of remuneration is properly characterised as equitable remuneration.
27 The parties should each go about assembling their lay evidence and file and serve it by a date to be settled shortly. Each of the parties should then put on their expert evidence. There should then be a time within which the parties should put on responsive material to both the lay and expert evidence.
28 As to the precise dates, I will direct the parties to provide me with proposed dates, within seven days, for the completion of the various steps. I am happy to have a further directions hearing about the steps but I would prefer the parties to caucus about realistic dates for completion of these steps with a view to a proposed hearing in 2019.