Back in November 2014 we reported that the iconic song, I Am Australian, was in the midst of a legal dispute in the Copyright Tribunal of Australia (Tribunal) between one of its co-authors, Bruce Woodley of The Seekers, and the Commonwealth Government. You can read more about the background to the dispute here.
What’s the update?
In summary, Mr Bruce Woodley and his company Pocketful of Tunes Pty Ltd (Applicant) applied to the Tribunal under section 183(5) of the Copyright Act 1968 (Cth) (Act) seeking a determination as to the terms of (and, importantly, licence fees payable for) the Department of Immigration’s past use of the famous tune in public citizenship ceremonies and on a related citizenship video montage from 2009-2012. Section 183 enables the Commonwealth to use copyright work “in the services of the Commonwealth or State”, but does not exempt the Commonwealth from paying appropriate fees to the copyright owner.
Skipping to the punch line, President Justice Bennett found that the final figure payable was$149,743.34 (exclusive of GST). This calculation was based on a range of factors, including the market value of usage rights in the song, the amount of use by the Department and the length of time over which it was used. You can read the full decision here.
We’ve set out the legal reasoning behind the decision (together with a summary of the almost Byzantine calculations used to reach the final figure, for more mathematically-minded readers) below. Or, you can jump to the key take-outs.
The legal reasoning
The judgment was handed down by Justice Bennett on 3 March 2015. There was no dispute between the parties that the song was produced and distributed by the Department of Immigration for use in citizenship ceremonies throughout 2009-2012. Nor was it disputed that the terms of this use had not been agreed between the parties. The primary issue was the terms appropriate to compensate the Applicant for use of the song in the video montage under section 183(5) of the Act.
The legal principles applicable in assessing compensation under this provision are not the same as those which apply when assessing damages for copyright infringement. The quantum is based on thevalue of the right that has been exercised by the Commonwealth, as opposed to the loss suffered by the copyright owner. There are very few cases on this issue. However, the existing cases indicate that the Tribunal must act fairly and reasonably to compensate the copyright owner, and put emphasis on:
- The market rate for use of the material (in this case, assessed at around $250,000-$300,000 per year); and
- The assumption that the parties would have done business on an arm’s length basis and thatneither would have been unreasonable (e.g. by demanding a grossly excessive or inadequate sum for the usage rights).
In summary, the fee must be equivalent to the amount which the Applicant would have required the respondent to pay to it for permission to use the work in the manner it was used (1).
Let’s get mathematical: calculating the licence fee
With these considerations in mind, Justice Bennett looked at a range of different methods of calculation put forward by the parties to decide which was the most appropriate way of arriving at a final figure. The following was important:
- The “market rate” for use of the song was estimated at approximately $1500 per year, as this was the sum paid by the Brisbane City Council for the licence rights in 2007. Also, while there were deficiencies in using this as a basis, the calculation needed to take into account the likelihood that different licence fees would have been negotiated with councils in different parts of the country, and that some councils may not have wanted to licence the song at all;
- It was also important to assume that the parties would have done business on an arm’s length basis and that the fee would not have been grossly inadequate or grossly excessive. The Commonwealth produced evidence that it would never had recommended or approved a synchronisation fee of $250,000 for the song and that the salary budget during the relevant period for the entire section of Citizenship Ceremonies and Promotion was only $538,000 per annum – approximately double some of the annual licence fees proposed by the Applicant.
The Applicant put forward the following proposals:
PROPOSAL A: $1500 (based on the Brisbane City Council fee) x 22% (the proportion of councils around Australia that used the video montage) – 30% (a discount to take into account the non-commercial nature of the use) = $156,000 per year.
PROPOSAL B: $450 per DVD x 565 (the number of councils to which the montage was distributed x the rate commonly used in the music industry for the reproduction of music on a soundtrack to in-house corporate or educational DVD) ÷ 2 (to factor in evidence that around half of the councils would be interested in licensing the song) = $15,000 per year.
However, Justice Bennett did not think that these methods were appropriate in light of the considerations above. Her Honour based the final calculation on a proposal more closely aligned with the Commonwealth’s submission. The final method was:
$1500 (based on the Brisbane City Council fee)
x 20 (to factor in the approximate population of Australia, then 21,507,717) = $30,000
+ an additional 17% (for Departmental use) = $35,100
+ an additional 2% (for other uses) = $35,802
+ a premium of $5,000 (to allow for the fact the Commonwealth would have sought to negotiate for a national licence for use by all councils) = $40,802 per year
x 3.67 years = $149,743.34
- Despite the Commonwealth’s ability to use copyright work “in the services of the Commonwealth or State”, the Tribunal will still take action to enforce the rights of the copyright owner to receive appropriate compensation.
- Calculating this compensation is notoriously difficult and the Tribunal will need to exercise a wide discretion in arriving an appropriate sum. This might include taking into account factors as diverse as the “market rate” for the work, current population figures and any appropriate “premiums”!
- The “market rate” for the use might differ depending on whether the use is commercial or non-commercial.
- In relation to musical works, performance and synchronisation licensing are completely different areas of licensing and will need to be considered separately.