| Author: | Tanya Aplin IMAGO Senior Research Fellow in Multimedia Law, Murdoch University |
| Subjects: | Broadcast Rights Copyright (Other articles) |
| Issue: | Volume 4, Number 3 (September 1997) |
| Category: | Current Developments |
INTRODUCTION
The High Court in the recent case Telstra Corporation Ltd v Australasian Performing Right Association Ltd [1] has interpreted two important exclusive rights contained in the Copyright Act 1968 (Cth). These are the broadcast right in s 31(1)(a)(iv) and the diffusion right in s 31(1)(a)(v). The decision raises difficulties for telecommunications operators in the context of networked technology and information.
Telstra was a test case brought by APRA against Telstra concerning Telstra’s copyright liability for providing music on hold. The court considered Telstra’s copyright liability in the following three situations:
The music provided was either pre-recorded or a radio broadcast, and was provided whether the caller on hold used a conventional or mobile telephone.
The appeal to the High Court focussed on two issues:
Broadcast Right
All members of the Court found that Telstra had infringed the broadcast right when mobile callers received music on hold. Only Dawson and Gaudron JJ and Kirby J gave reasons why this was so. For these judges the issue of infringement of the broadcast right turned on the definition of “broadcast” in s 10(1). Section 10(1) defines ‘broadcast’ as:
"transmit by wireless telegraphy to the public".
The only part of this definition in contention was the meaning of “to the public”.
Dawson and Gaudron JJ and Kirby J expressed the view that the legislative history of the definition of broadcast indicated that the words “to the public” was supposed to incorporate the notion of the copyright owner’s public.[4] The copyright owner’s public refers to “the group which the copyright owner would otherwise contemplate as its public for the performance of its work”.[5] This notion had emerged from a line of English authorities concerned with the right of performance in public, which authorities were reviewed by Gummow J in Australasian Performing Right Association Ltd v Commonwealth Bank of Australia.[6]
For Dawson and Gaudron JJ what was central to identifying the copyright owner’s public was “the nature of the audience constituted by those who receive music on hold”.[7] The critical indicator of the nature of the audience was said by them to be the commercial context of the communication.
Lying behind the concept of the copyright owner’s public is recognition of the fact that where a work is performed in a commercial setting, the occasion is unlikely to be private or domestic and the audience is more appropriately to be seen as a section of the public.[8]
According to Dawson and Gaudron JJ, the arrangement of music on hold had a commercial quality because persons, other than the callers, were prepared to pay for the facility.[9] The commercial character of the music on hold service indicated that it was transmitted to the copyright owner’s public. [10]
Kirby J identified three broad principles from the cases on performances in public that were relevant to elucidating the meaning of “to the public”. The first principle was that a performance was “in public” if it was not “in private”.[11] The second principle arose from the need to make the distinction between “public” and “private” and it involved asking, what is the nature of the audience in question? A significant indicator of the nature of the audience was the commercial nature of the activity occurring.[12] The third, and according to Kirby J most important, principle is that the public is the copyright owner’s public.[13]
Applying these principles to the facts in the case, Kirby J concluded that the transmission of music on hold by Telstra constituted a broadcast. The music on hold was an adjunct to the commercial activity of operating a telecommunications service and therefore could not be described as “private”.[14]
DIFFUSION RIGHT
A majority of the Court, consisting of Dawson and Gaudron JJ and Kirby J, found that Telstra had infringed the diffusion right when conventional callers received music on hold. Toohey J and McHugh J were in dissent on this issue.
The Court approached the issue of breach of the diffusion right in three stages:
Stage 1: Diffusion Service
Section 26(1) defines for the purpose of s 31(1)(a)(v) what constitutes a diffusion service. Section 26(1) reads:
A reference in this Act to the transmission of a work or other subject-matter to subscribers to a diffusion service shall be read as a reference to the transmission of the work or other subject matter in the course of a service of distributing broadcast or other matter (whether provided by the person operating the service or by other persons) over wires, or over other paths provided by a material substance, to the premises of subscribers to the service.
The majority considered that music on hold was a diffusion service pursuant to s 26(1) if there was a “service” of “distributing” music.
The majority held that such a “service” existed. Dawson and Gaudron JJ identified a service as requiring “some system or organisation whereby those intended to be served received the service”[15] and found that a systematic transmission of music was carried out by Telstra. Kirby J thought that the growth of music on hold facilities supported the inference that music on hold was a “service”.[16] All three members of the majority were of the opinion that playing music on hold could still be a “service” even if the callers did not want to hear it.[17]
The majority also found Telstra to be “distributing” the music, even though the music was received by individuals through their individual telephone connections and might only be heard by one caller at any one time. This was because there was a common source from which the music was conveyed over wires to the various callers.[18]
Toohey J, a member of the minority, did not dispute that a diffusion service existed. However, McHugh J, disagreed with this conclusion but for a reason not dealt with by any other member of the Court. His honour argued that music on hold was not “broadcast or other matter” within s 26(1).
McHugh J argued that the meaning of “broadcast” in s 26(1) referred to the definition of “broadcast” in s 10, namely, to “transmit by wireless telegraphy to the public”.[19]
McHugh J concluded that the music sent over the telephone wires was not broadcast because it had not first been transmitted to the public by wireless telegraphy.[20]
According to McHugh J, the phrase “other matter” was also unable to encompass the music on hold because its meaning was limited by the word “broadcast”.
In my view, the preferred construction of s 26(1) is that ‘other matter’ must be read ejusdem generis with ‘broadcast…matter’. Unless that is done, the latter expression is effectively redundant, notwithstanding that the term ‘broadcast’ is a key term in Pt III of the Act.A much better construction of the expression ‘broadcast or other matter’ in s 26(1) is that it refers to matter that is transmitted to the public by wireless telegraphy or some like means involving the transmission of signals, sounds or images by electro-magnetic energy but without any means of guidance by wires or other paths provided by a material substance.[21] (emphasis supplied)
Stage 2: Subscribers to the Diffusion Service
The next stage was whether the callers could be characterised as “subscribers”. The majority accepted that persons calling Telstra, or businesses who had the CustomNet facility, or businesses with a music on hold facility of their own, did not agree to the provision of music while placed on hold. The majority circumvented this difficulty by relying on s 26(5) to deem the callers “subscribers”. Section 26(5) provides:
Where a service of distributing matter over wires or over other paths provided by a material substance is only incidental to, or part of, a service of transmitting telegraphic or telephonic communications, a subscriber to the last mentioned service shall be taken, for the purposes of this section, to be a subscriber to the first mentioned service.
The majority found that the music on hold was “a service of distributing matter” (diffusion service) which was “incidental to, or part of” Telstra’s telecommunications service. Consequently, a subscriber to the telephone service could be deemed to be a subscriber to the diffusion service.
Toohey J was the only minority judge to adopt a contrary interpretation of the scope of s 26(5) on the issue of callers being “subscribers”. Toohey J sought to follow the interpretation of Gummow J at first instance. This interpretation was that s 26(5) referred to two separate and distinct services; that s 26(1) defined such a service and a subscriber was fundamental to this definition; that the callers had not subscribed to the music on hold facility and therefore there was no “service of distributing matter” and s 26(5) could not be invoked.[23]
Stage 3: Causing the works to be transmitted
The final stage was a consideration of whether Telstra had caused the works to be transmitted to subscribers to a diffusion service. Again, s 26 was relevant to this issue. Section 26(2) states that,
the person operating the service shall be deemed to be the person causing the work or other subject-matter to be so transmitted.
Section 26(4) explains that,
the person operating a service of distributing broadcast or other matter shall be read as a reference to the person who, in the agreements with subscribers to the service, undertakes to provide them with the service, whether he is the person who transmits the broadcast or other matter or not.
Therefore, to determine who caused the works to be transmitted to subscribers to a diffusion service, it was necessary to identify the person who, in agreement with subscribers to the service, undertook to provide the service. There was, of course, no agreement between Telstra and the callers for Telstra to provide them with music while on hold.
The majority relied on s 26(5) to deem such an agreement between Telstra and callers to exist, thereby making Telstra the person operating the diffusion service under s 26(4) and thus the person causing the transmission under s 26(2).[24] The majority maintained that if s 26(5) deemed a subscriber to an agreement to exist, it must also deem the agreement to exist, because it was not possible to have a subscriber without an agreement. [25]
McHugh J was the only minority judge to consider this question and was staunchly opposed to the majority’s application of s 26(5). His honour argued that the majority’s interpretation of s 26(5) was an improper extension of that provision because s 26(5) was a deeming provision which needed to be read strictly as only deeming a “subscriber”.[26]
Broadest right
The expression “copyright owner’s public” found its way into the reasons of Dawson and Gaudron JJ and Kirby J. This phrase should not be adopted as explanatory of what is “to the public” because it is tied to a flawed chain of reasoning. The reasoning is that of Greene LJ in Jennings v Stephens[27] and involves asking the question,
whether or not the act complained of as an infringement would, if done by the owner of the copyright, himself, have been an exercise by him of the statutory right conferred upon him.[28]
This reasoning is circular and makes the notion of “copyright owner’s public” an empty one.[29] To use the notion as synonomous with “to the public” is a dangerous practice since it does nothing to elucidate the meaning of this phrase. The nature of the audience and the commercial character of the activity involved are principles which better assist the determination of what is “to the public” and should be used instead of the notion of “copyright owner’s public”.
It is worth asking whether the finding by the Court that the transmissions were “to the public” was correct. According to Gummow J at first instance it was not. His honour argued that the essential nature of the communication was not “public”.
[I]t would be distorting the language of the broadcasting provisions to hold that if during the course of his private communication one party was to communicate a work to the other party, this amounts to a broadcast by Telecom to the public.[30]
The above statement and conclusion of Gummow J is erroneous and the findings of the Court on this point are preferable. APRA was in no way maintaining that, if in the course of a private conversation, a work is communicated to the other party, that communication is to the public. The contention of APRA was that, when callers were placed on hold, the private communication between two persons was interrupted and transformed into a public communication. Music from a central source would be placed to that caller and to any other caller put on hold at that moment in time. At this point the nature of the audience changed from a private audience to a public audience. This is supported by the fact that the playing of music on hold was a commercial activity. Telstra was prepared to pay for the service to callers to its service centres, businesses were prepared to pay for the CustomNet facility, while other businesses were prepared to pay to acquire a telephone system which had a facility for providing music on hold. This preparedness to pay suggests that the music on hold facility served a commercial purpose and it was this commercial purpose which turned the audience into a public audience.[31]
Implications of the finding of infringement
A serious concern arises from the finding that Telstra breached the broadcast right in a Telstra customer played music across the Telstra network. A significant difference exists between Telstra’s passive transmission of music in this situation and when it actively co-ordinates the playing of music in the other two situations. Given that such a difference exists, it is unfortunate that the Court did not pay any attention to the meaning of “transmit” in the definition of broadcast. This lack of attention may be explained by the parties failure to raise the matter in argument. Nevertheless, the issue remains of whether it is fair to consider Telstra to have “transmitted” the music where a business independently chooses to play music to callers on hold and Telstra only provides the communications infrastructure to do so. The policy issues surrounding this issue need to be fully aired in a context of explicating the meaning of “transmit”. This is particularly necessary when the ramifications of the finding are far reaching. For example, there is the potential for Telstra to be held liable for the transmission of works from a website on the Internet to a person who dials into the Internet using his mobile phone and laptop computer.
There are other reasons why the meaning of “transmit” needs attention. One reason is to ensure that the infringement concepts in s 36(1) are not effectively merged. Section 36(1) states:
Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.
By finding passive transmissions and active transmissions to both be transmissions for the purposes of a broadcast, the role of authorisation as a direct infringement is ignored. This avoids having to resolve some of the difficult questions surrounding what counts as an ‘authorisation’ of copyright infringement in the area of networked transmissions.
Another reason is if the proposed right of transmission to the public is introduced into copyright legislation.[32] This right is meant to combine the broadcast right and the diffusion right into a single, technology neutral right and what constitutes a “transmission” will be pivotal to the operation of the right.
Stage 1: Diffusion Service
The majority correctly determined that the music on hold was a “service” of distributing broadcast or other matter. It should not matter that some callers may not appreciate the service. What should matter is that a facility is being systematically provided. Telstra was systematically transmitting music where a person called a Telstra office or a business which had subscribed to CustomNet. However, where persons called a business which had their own music on hold facility, it was the business which was systematically transmitting the music over Telstra’s network and thus providing the “service”. This distinction was not made by the majority, yet it is relevant to their application of s 26(5) which is discussed later.
It is also fair to say that the service was “distributing” matter. The definition of “distribute” in the Macquarie Dictionary is “to divide and bestow in shares; deal out; allot…to disperse through a space or over an area; spread; scatter.” Provided a common fund or source of music is available to be shared, it should not matter that the process of sharing occurs over individual telephone connections and at different times.
The majority failed to consider the meaning of “broadcast or other matter” and assumed the music played came within that description. The analysis of this phrase by McHugh J shows that “broadcast or other matter” refers to transmissions by wireless telegraphy or similar means to the public. This analysis seems to be correct since there is nothing in s 26(1) to suggest that s 10 does not apply to that section or that a different meaning of “broadcast” is to be used for the purposes of that section. Further, the inclusion of the word “broadcast” would be superfluous if “other matter” were to cover any type of transmission.
The majority’s failure to address the ambit of “broadcast or other matter” is not serious because, while McHugh J’s construction was correct, his application of that construction was not. Some of the music played on hold was radio broadcast and thus had been “transmitted by wireless telegraphy to the public”, albeit by the radio broadcasters and not Telstra. However, s 26(1) makes it clear that other persons may provide the “broadcast or other matter”. The prerecorded music would also come within the terms “broadcast or other matter” since this music was the same music which was distributed to callers using mobile phones and this transmission was found by the Court to be a broadcast. Even though this music might be played to mobile phone callers at different times this would not be an obstacle since McHugh J recognised that the matter “has been, is being, or will be transmitted ‘by wireless telegraphy to the public’”.[33]
Stage 2: Subscribers to the Diffusion Service
The majority’s construction of s 26(5) is to be preferred. Kirby J makes a valid point that the words of s 26(5) clearly intend that subsection to control the operation of the term “subscribers” in s 26 because s 26(5) is expressed to apply “for the purposes of this section”.[34] These words do suggest that s 26(5) can operate to provide the subscriber for the purpose of s 26(1) and that it is not necessary to identify a subscriber before a “service of distributing matter” exists.
It is significant that in s 26(5) there is only a partial reproduction of the words in s 26(1), omitting reference to “the premises of subscribers to the service”. This omission would also suggest that subscribers are not integral to identifying a “service of distributing matter over wires”. Further, the terms of s 26(1) support this view. Section 26(1) is intended to explicate the composite phrase “transmission of a work or other subject matter to subscribers to a diffusion service”. If the explication itself is composite then the phrase “to the premises of subscribers to the service” must be pertinent to the “to subscribers” part of the former phrase and the “service of distributing broadcast or other matter…” part explain the diffusion service part of the phrase.
The majority view is strengthened by the fact that if the contrary construction expressed by Gummow J at first instance and followed by Toohey J was adopted, s 26(5) would have virtually no role to play and would be a redundant provision.
Stage 3: Causing the works to be transmitted
The reasoning of the majority at this stage is more sound. If a subscriber to a service is deemed, then any agreement with that subscriber to provide them with that service must also be a fiction because a true agreement, which is of a consensual nature between two or more parties, cannot occur where one party is deemed to be such. Further, if a true agreement is always required, the role of s 26(5) to identify subscribers would become redundant. Therefore, it seems a natural consequence of s 26(5) that the agreement between Telstra and its callers to provide its callers with a telecommunications service was extended to the provision of a diffusion service to the same subscriber.
IMPLICATIONS OF THE MAJORITY’S CONSTRUCTION OF S 26(5)
The result of the majority’s construction of s 26(5) is that it deems both the subscriber to the service and the operator of the service. Thus, when the subsection comes into play, the role that it assumes is a very significant and far reaching one. In this case, its effect was to determine that Telstra was the person who caused the music to be transmitted to subscribers to a diffusion service, thus breaching the exclusive right contained in s 31(1)(a)(v), in all three situations of the music on hold facility.
One of these situations was when a business operated its own music on hold facility and Telstra merely participated by virtue of the fact that it operates a telecommunications infrastructure and service. The fact that Telstra was held to cause the works to be transmitted to subscribers to a diffusion service in this instance, where it took no active part in the systematic transmission of music on hold, is a worrying conclusion and might have serious repercussions. There is arguably no difference between this situation and a situation where a person dials into the Internet using their Telstra phone and receives information from a website.
Is it fair that where Telstra is not actively responsible for the service of distributing broadcast or other matter it is held to be the person operating the service and thus liable for the transmission of the musical works? In s 26(4) the person operating the service is the person who undertakes to provide it even if that person does not transmit the broadcast matter. Therefore, in this subsection, it is contemplated that the person operating the service (and thus the person causing the work to be transmitted by virtue of s 26(2)) may be someone other than the person who actually transmits the broadcast matter. However, the allocation of responsibility by this subsection is premised on there being an actual agreement and not a deemed agreement. It could not possibly be fair to contemplate that Telstra would be liable for other people’s services. Certainly, not without a discussion of the policy arguments involved, which did not occur in this case.
The majority should have paid closer attention to the circumstances in which the application of s 26(5) is triggered. That is, to the meaning of the words,
where a service of distributing matter…is only incidental to, or part of, a service of transmitting telegraphic or telephonic communications. (emphasis added)
The following interpretation of the words “incidental to, or a part of” in s 26(5) could have avoided the ludicrous position of Telstra being held liable for other people’s transmissions. These words suggest that the same person is providing the service of transmitting telegraphic or telephonic communications and the service of distributing matter over wires. This is because the service of distributing matter can only be “incidental to or a part of” the telecommunications service if the person providing that latter service has made it “incidental to or a part of it” by adopting it in some way. An example of such adoption is organising the service itself. However, merely acting as the physical conduit would not be an adoption and when businesses systematically played music to callers on hold through their telephone system this would not be “incidental to or a part of” Telstra’s telephone service.
CONCLUSION
In an ever increasing environment of networked communications and information transfer, the Telstra case was a timely opportunity for the High Court to explore the ambit of the broadcasting and diffusion rights provisions of the Copyright Act 1968 (Cth).
While it is believed the Court basically adopted the correct interpretation of these provisions, there was a glaring absence of consideration of certain elements of these provisions. These elements impact significantly on whether Telstra, or any other telecommunications operator, would be found liable for merely providing the physical means of transmission of information.
The Court should have paid attention to when a work is “transmitted” for the purposes of the broadcast right. Further, the Court should have considered when a diffusion service is “incidental to, or a part of” a telecommunications service for the purposes of s 26(5).
Failure to discuss these important questions of statutory interpretation resulted in Telstra being found liable for both active and passive transmissions of music and puts Telstra at risk of copyright liability in countless other situations where they only provide the infrastructure to carry information.
Notes
[1] (1997) 146 ALR 649.
[2] Australasian Performing Right Association v Telstra Corp Ltd (1993) 46 FCR 131.
[3] Australasian Performing Right Association v Telstra Corporation Ltd (1995) 60 FCR 221.
[4] 657 per Dawson and Gaudron JJ and 694 per Kirby J.
[5] 692 per Kirby J.
[6] (1992) 40 FCR 59.
[7] 658.
[8] 658 per Dawson and Gaudron JJ.
[9] 658-659.
[10] 658-659.
[11] 690-691.
[12] 691.
[13] 692.
[14] 694-695.
[15] 654.
[16] 682-683.
[17] 653 per Dawson and Gaudron JJ and 682 per Kirby J.
[18] 654 per Dawson and Gaudron JJ and 683 per Kirby J.
[19] 664.
[20] 665.
[21] 666.
[22] 668.
[23] 660 per Toohey J.
[24] 655 per Dawson and Gaudron JJ and 688-689 per Kirby J.
[25] 655 per Dawson and Gaudron JJ and 688-689 per Kirby J.
[26] 671.
[27] [1936] Ch 469.
[28] 485 per Greene LJ.
[29] APRA v Commonwealth (1992) 40 FCR 59 at 71 per Gummow LJ supports this view.
[30] APRA v Telstra Corp Ltd (1993) 46 FCR 131 at 144.
[31] In much the same way as occurred in APRA v Commonwealth where the playing of the video served a commercial purpose of the Bank to impart information to its employees.
[32] This right is proposed by the Commonwealth Discussion Paper, Copyright Reform and the Digital Agenda, July 1997, Attorney-General’s Department and the Department of Communications and the Arts.
[33] 668 per Kirby J.
[34] 685.