Just before Christmas last year, Justice Bennett handed down the decision in Seven Network Limited v Commissioner of Taxation [2014] FCA 1411 which held that no copyright existed in Channel Seven’s live television broadcasting of the 2006 (Winter) Olympics in Turin, and the 2008 Olympic Games in Beijing, to Australian viewers. Her Honour found that the footage was transmitted via a signal that came from the host broadcasters present at the Games – and that no copyright subsisted in that signal because what was transmitted was data and not itself visual images or things, until they were converted into visual images or things in the receiver. That is, there was no “embodiment” of the sounds or visual images in material form, and therefore no copyright could subsist.

Oddly, this case was not a copyright infringement case. It was primarily about tax. The Commissioner of Tax brought an action against Channel Seven, arguing that Seven should have withheld part of the payments it made to the International Olympic Committee (IOC – a resident of Switzerland) for the live television broadcasting rights for the Olympics, on the grounds they were “royalties” for the use of copyright (according to the Swiss Treaty on double taxation).

The question then became – was there copyright in the signal so as to require Seven to pay withholding tax for using that copyright? Justice Bennett said no.

The Commissioner relied on aspects of the technology that suggested permanence or stability of the signal, and submitted that “embodiment” in an article or thing (pursuant to the Copyright Act) does not require that the article or thing be tangible. The Commissioner argued that copyright subsists in an aggregate of visual sounds and images capable of being shown as a moving picture, irrespective of the means of embodiment – meaning that the film comes into existence when it is embodied or stored in the signal – and as such, are discernible and identifiable and can be reproduced. On the other hand, Channel Seven argued that one could not call an electromotive force carried down a wire, an “article or thing” – and thus there was no copyright subsisting in the signal, and therefore no tax to be paid.

Justice Bennett agreed with Channel Seven and held that the Commissioner’s submissions had no foundation, and that the signal is “more in the nature of the fleeting use of a medium of communication than an aggregate of sounds and visual images that may convey a cinematograph film of the Olympic event to the viewer.” In coming to a conclusion, her Honour found that:

  • what is transmitted by the signal is data and not itself visual images or things until converted into visual images or things in the receiver;
  • the visual images or things are therefore not embodied in the signal;
  • the signal is not embodied in any article or thing;
  • the use of the data may result, via the receiver, in an aggregate of visual images capable of being shown as a moving picture, or of being embodied in another article or thing as set out in the definition of cinematograph film in the Copyright Act; and
  • to be a cinematograph film, the aggregate of the visual images must first be embodied in the article or thing and that does not occur in the signal but after the data stream is converted by the receiving device, such as a television receiver in Australia.

We think the case takes quite a narrow view of embodiment, and also illustrates the technical nature of copyright in audio visual signals, recordings and broadcasts.

The Commissioner has since appealed the decision, and the matter is listed for callover in April.