In Pocketful of Tunes Pty Ltd v The Commonwealth of Australia [2015] ACopyT 1, Justice Bennett (President) of the Copyright Tribunal of Australia had to assess compensation for the unlicensed use of a song by the Commonwealth. 

A Commonwealth department produced a video montage containing the well-known song "I am Australian", for use in Australian citizenship ceremonies.  While the department had a licence to play the song during the ceremonies, it did not have a licence to reproduce and use the lyrics on the sound-track of the video (otherwise known in the industry as the "synchronisation right").  Because it was agreed that the use was for the services of the Commonwealth, it is deemed not to be copyright infringement under s 183(1) of the Copyright Act 1968 (Cth).  However, the owners of copyright (being either or both of Mr Woodley, a co-writer of the song, and Pocketful of Tunes Pty Ltd, the alleged assignee of the rights) are entitled to compensation under s 183(5). 

In determining compensation, the Tribunal must assess the value of the right that has been exercised by the Commonwealth, taking into account the market rate for the use of the material and assuming that the parties would have acted fairly, reasonably and willingly, at arm's length, and that they would have done business. 

Two competing approaches were suggested by the parties:

  1. The copyright owners sought to extrapolate out from an earlier licence for the same song that was granted to Brisbane City Council, valued at $1,500 per year for the synchronisation right, to the 124 Councils that they predicted were likely to have taken up a similar licence (plus an additional percentage to reflect non-Council usage).  This resulted in a proposed licence fee of $226,000 for the period of use by the Commonwealth.
  2. The Commonwealth, however, suggested that it was more appropriate to calculate the licence fee based on the relative population of Brisbane compared to Australia.  Since this was about 5% at the time, the Commonwealth proposed a licence fee of $30,000 per annum, obtained by multiplying the value of the Brisbane City Council licence by 20 (plus some additional amounts, resulting in a total licence fee of $149,743.34 for the period of use). 

Justice Bennett accepted that the Commonwealth's approach was more accurate than the approach espoused by the copyright owners, given the deficiencies in the evidence concerning uptake by individual Councils.  For example, out of the 556 Councils that the Commonwealth department had asked to return the video montage, 487 of them said that they had not used the montage, or had no record of receiving it, or could not provide a conclusive response.  In addition, her Honour was influenced by the fact that the department's salary budget during the relevant period was only $538,000 and, therefore, it was unlikely that a deal would have been done for the amount requested by the copyright owners. 

Finally, her Honour looked at whether Mr Woodley's retrospective assignment of all his rights, title and interest in the song to Pocketful of Tunes Pty Ltd was effective in assigning the right of action against the Commonwealth.  Justice Bennett applied the decisions of Insight SRC IP Holdings v The Australian Council for Educational Research [2012] FCA 779 and Equuscorp Pty Ltd v Haxton [2012] HCA 7 and found that Pocketful of Tunes Pty Ltd had a genuine commercial interest in enforcing the claims that previously were available to Mr Woodley and therefore the assignment was effective.