Telstra Corporation Ltd v Australasian Performing Right Association Ltd

(1997) 191 CLR 140

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(Judgment by: Dawson, Gaudron JJ)

TELSTRA CORPORATION LTD v AUSTRALASIAN PERFORMING RIGHT ASSOCIATION LTD

Court:

Judges:
Dawson, GaudronToohey
McHugh
Kirby JJ

Subject References:
COPYRIGHT
Exclusive rights
Infringement
Musical and literary works
Provision of music to telephone callers placed on hold
Callers using conventional telephones
Diffusion right
Whether Telstra caused works to be transmitted to subscribers to a diffusion service
Callers using mobile telephones
Broadcast right
Whether Telstra broadcast works.

Other References:
Copyright Act 1968 (Cth), ss 10(1), 26, 31(1)(a)(iv), 31(1)(a)(v), 199(4).

Judgment date: 14 AUGUST 1997

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Judgment by:
Dawson, Gaudron JJ

The respondent, the Australasian Performing Right Association Limited ("APRA"), owns the copyright in a number of musical and literary works ("the works") which are the music and lyrics of various songs. The appellant, Telstra Corporation Limited ("Telstra"), which previously traded under the name of Telecom, holds a general telecommunications licence under the Telecommunications Act 1991 (Cth) and supplies, maintains and owns a telecommunications network in Australia. This test case arises from the participation by Telstra in the provision, in various ways, of music to telephone users who are placed on hold ("music on hold"). It is common ground that the works were used in providing music on hold.

APRA contends that, by its participation in the provision of music on hold, Telstra has infringed certain exclusive rights in the works which APRA enjoys as copyright owner pursuant to s 31 of the Copyright Act 1968 (Cth) ("the Act"). That section relevantly provides:

"(1) For the purposes of this Act, unless the contrary intention appears, copyright, in relation to a work, is the exclusive right:

(a)

in the case of a literary, dramatic or musical work, to do all or any of the following acts:

...

(iii)

to perform the work in public;

(iv)

to broadcast the work;

(v)

to cause the work to be transmitted to subscribers to a diffusion service".

APRA contended before Gummow J at first instance in the Federal Court that Telstra had engaged in activities which fell within each of the three sub-paragraphs of s 31(1)(a) set out above. Gummow J rejected APRA's contentions in relation to each sub-paragraph ^[F1] . APRA appealed to the Full Court of the Federal Court, but no reliance was placed upon sub-par (iii) and it may be disregarded for present purposes. The Full Court allowed APRA's appeal ^[F2] . It held unanimously that Telstra had broadcast the works within the meaning of sub- par (iv) and held by majority (Black CJ and Burchett J; Sheppard J dissenting) that Telstra had caused the works to be transmitted to subscribers to a diffusion service within the meaning of sub-par (v). Telstra now appeals to this Court against the decision of the Full Court.

The evidence revealed that Telstra participated in the provision of music on hold in three different ways. The first was where a person made a telephone call to a Telstra service centre and heard music played by a machine at the centre when he was placed on hold. The second situation involved a person who heard music on hold after calling various business and governmental organisations to which Telstra provided a transmission facility for that purpose. The third situation involved a person hearing music on hold after making a telephone call to a subscriber to a service known as CustomNet, which is provided by Telstra. Where the telephone line of a subscriber to CustomNet is busy, the electromagnetic current carrying the call is diverted to a music on hold facility situated at Telstra's nearest telephone exchange. In any of these three situations the music on hold may be pre-recorded and played from a compact disc or tape recording or may consist of music broadcast from a radio station which transmits to the general public.

Each of the three situations outlined above may occur in one of two ways. The first is where the caller uses what might be described as a conventional telephone; the second is where the caller uses a mobile telephone. APRA contends that, in respect of music on hold heard by callers using a conventional telephone, Telstra has caused the transmission of the works to subscribers to a diffusion service within the meaning of s 31(1)(a)(v). In the case of music on hold heard by a caller using a mobile telephone, APRA contends that Telstra has broadcast the works within the meaning of s 31(1)(a)(iv).

Conventional telephones: s 31(1)(a)(v)

It is convenient to turn first to the question whether, by its participation in the provision of music on hold to callers using conventional telephones, Telstra has infringed APRA's exclusive right to cause the works to be transmitted to subscribers to a diffusion service within the meaning of s 31(1)(a)(v). The right conferred by s 31(1)(a)(v) had its origin in the right of public communication guaranteed by the 1886 Berne Convention for the Protection of Literary and Artistic Works, in the manner described by Kirby J in his judgment. The provision itself contains three requirements which must be considered in this case. First, there must be a diffusion service. Secondly, the work must be transmitted to subscribers to that service. Thirdly, the alleged infringer must have caused that transmission.

Section 31(1)(a)(v) is amplified by s 26 of the Act. It is necessary to set out s 26 in full as it stood at the relevant time:

"(1) 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.

(2) For the purposes of this Act, where a work or other subject-matter is so transmitted:

(a)

the person operating the service shall be deemed to be the person causing the work or other subject-matter to be so transmitted; and

(b)

no person other than the person operating the service shall be deemed to be causing the work or other subject-matter to be so transmitted, whether or not he provides any facilities for the transmission.

(3) For the purposes of the application of this section, a service of distributing broadcast or other matter shall be disregarded where the service is only incidental to a business of keeping or letting premises at which persons reside or sleep, and is operated as part of the amenities provided exclusively for residents or inmates of the premises or for those residents or inmates and their guests.

(4) A reference in this section to 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.

(5) 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."

Although there is no dispute about it, reference should be made to s 199(4) at this point. That sub-section provided:

"A person who, by the reception of an authorised television broadcast or sound broadcast, causes a literary, dramatic or musical work or an adaptation of such a work, an artistic work or a cinematograph film to be transmitted to subscribers to a diffusion service shall be treated, in any proceedings for infringement of the copyright, if any, in the work or film, as if he had been the holder of a licence granted by the owner of that copyright to cause the work, adaptation or film to be transmitted by him to subscribers to that service by the reception of the broadcast."

The sub-section is limited to transmission to subscribers to a diffusion service but appears to reflect a policy that royalties paid for an authorised broadcast ought to be regarded as covering the extension of the broadcast to the subscribers to a diffusion service.

Returning to s 26 and to the first requirement of s 31(1)(a)(v), it is not contested that the transmission of music on hold to users of a conventional telephone occurs "over wires, or over other paths provided by a material substance", within the meaning of s 26(1). However, the question remains whether there can be said to be a "service of distributing broadcast or other matter". In the light of s 199(4), it is "other matter" which is the more significant category for present purposes, but under s 26(1), both in the case of broadcast matter and other matter, the matter need not be provided by the operator of the diffusion service. That is important because music on hold comes from both sound recordings and radio broadcasts. In either case it is irrelevant that Telstra has not itself provided or selected the music. But there still must, under s 26(1), be a service of distributing such matter. It is this aspect of the concept of a diffusion service which is contested.

Turning for a moment to the second requirement of s 31(1)(a)(v), whilst that provision refers to transmission to "subscribers to a diffusion service", s 26(1) requires that reference to be read as a reference to transmission to "the premises of subscribers to the service". The shift in meaning required by s 26(1) would seem to have a practical explanation: it could not be expected that a transmission by means of a diffusion service would always be to a subscriber personally whereas it would necessarily be to his or her premises. But the point made by Telstra is that the premises to which music on hold is transmitted are not those of subscribers. On the contrary, Telstra says, where a business or organisation has arranged for a music on hold transmission facility to be provided to it by Telstra or subscribes to CustomNet, it is that business or organisation which constitutes the subscriber to the facility of providing music on hold. It is said that the operation of such a facility could not involve transmission to those subscribers because the music on hold is transmitted straight to the caller to those premises; it is never transmitted to the premises which the caller is calling. In the case of a call to a Telstra service centre, it is said that there are no subscribers at all.

Allied to this submission is the contention by Telstra that music on hold cannot be a service to callers who receive it because they may not want to receive it but are compelled to do so while waiting to be connected to the person they have called. This brings us back to the first requirement of s 31(1)(a)(v), namely, that there must be a diffusion service. In our view, a service may nevertheless be a service even if it is unwanted by, and offers no choice to, those whom it is meant to serve. No doubt those who arrange for Telstra to provide music on hold to their callers are provided with a service, but that is not to say that music on hold is not also a service to those to whom it is played. Obviously, those who arrange for the music on hold to be played to callers who cannot get through regard it as a service to those callers or they would not make the arrangement. In the same way, music played in commercial premises may not be appreciated by persons frequenting the premises, but if it is provided it must be because it is perceived to be a benefit and good for business. This is recognised by s 26(3) which requires a diffusion service to be disregarded where it is only incidental to a business of keeping or letting premises at which persons reside or sleep and is operated as part of the amenities provided exclusively for residents or inmates of the premises or for those residents or inmates and their guests. It is not to be supposed that all the guests in a hotel, for example, will want to hear the music transmitted by the hotel as a service to them, but from the terms of s 26(3) it is apparent that that characteristic does not preclude an amenity from being regarded as a service for the purposes of the Act.

No doubt a service requires some system or organisation whereby those intended to be served receive the service. If there is any doubt about this, it is, we think, removed by the reference in s 26(1) to the transmission of the work or other subject-matter "in the course of" a service of distributing broadcast or other matter. This is significant for present purposes because it means that the mere transmission of a work in which there is copyright from one telephone user to another - by whistling a tune, for example - would not constitute a service. The system or organisation required must, under s 26(1), be for the purpose of distributing matter. Distribution involves the spreading abroad or dispersal of the thing being distributed. That is what happens with music on hold. From a common source the music is conveyed over wires to the various destinations at which it is received. A telephone service is ordinarily a means of communication between two persons, but this does not mean that it cannot also be used to provide a service of distributing matter. Indeed, while music on hold is played to a caller, the communication ceases to be two-way and may for that reason be more easily seen as a distribution. Moreover, the dispersal of matter need not be simultaneous for there to be a distribution of that matter. There may, of course, be more than one caller at a time who receives music on hold, but that does not mean that a single holder does not also receive it in the course of its distribution, notwithstanding that others receive it at different times. We are therefore satisfied that the transmission of the works occurred in the course of "a service of distributing broadcast or other matter", namely, the systematic provision of music on hold. It is this which constitutes the diffusion service referred to in s 31(1)(a)(v).

Identifying the relevant diffusion service in this way has certain consequences when one turns to the second requirement of s 31(1)(a)(v) and attempts to identify subscribers to the diffusion service. Realising this, APRA did contend that the telephone service provided by Telstra was itself a diffusion service, but that contention cannot be sustained. A diffusion service within the meaning of s 31(1)(a)(v) and s 26(1) is a service of distributing broadcast or other matter and that is an inapt description of a telephone service. The primary function of a telephone service is to facilitate communication between persons - usually two persons - and not the distribution of matter. Moreover s 26(5), in using the words "a service of distributing matter over wires or over other paths provided by a material substance" is describing a diffusion service within the meaning of s 26(1) (although without the requirement of subscribers), which it envisages as being distinct from a telephone service, although capable of being incidental to or part of that service. One may therefore accept that the systematic provision of music on hold is a diffusion service without accepting that the telephone service itself is a diffusion service, even though the former is only incidental to or part of the latter. But without more, the mere existence of a diffusion service does not identify any subscribers other than, perhaps, the subscribers for which Telstra contends, namely, those who arrange for the diffusion service to be provided. In this case, of course, the music on hold is not transmitted to those persons. It was for that reason that APRA sought to rely upon the telephone service (to which those who receive music on hold are subscribers) as a diffusion service. That argument having been rejected, APRA is forced to rely upon s 26(5).

However, in our view, s 26(5) is sufficient to serve the purpose of APRA in identifying subscribers to the diffusion service which otherwise clearly exists in this case. The systematic transmission of music on hold is, as we have said, a diffusion service, being a service of distributing broadcast or other matter to callers who receive the music. If it is not part of the telephone service which is used for the transmission because it is merely a one-way communication, then it is clearly incidental to the telephone service. The result of this is that, under s 26(5), a subscriber to the telephone service is deemed, for the purposes of s 26, to be a subscriber to the diffusion service. The evident intent of s 26(5) is to create subscribers to a diffusion service conducted as part of or incidentally to a telephone service where otherwise they would not exist. It is to be noted that the opening words of s 26(5) do not use the term "diffusion service", for to do so might suggest the requirement under s 31(1)(a)(v) and s 26(1) that there be subscribers to it. Instead, s 26(5) commences with that part of the definition of a diffusion service contained in s 26(1) which does not contain the requirement of subscribers and then deems the subscribers to the telephone service to be the subscribers to the diffusion service. The works were undoubtedly transmitted to the premises of the subscribers so deemed.

The result is to give an expanded operation to s 26(1) and, consequently, to give s 31(1)(a)(v) an extended application. But s 31(1)(a)(v) cannot be construed without reference to s 26 and unless sub-s (5) of that section is given the meaning which we have given it, it is difficult to see what meaning it could be given. Simply as a matter of construction that result is required, for it is not possible to read s 31(1)(a)(v) in isolation from s 26.

The third and final requirement which APRA must establish is that it was Telstra which caused the works to be transmitted to the premises of the deemed subscribers. Under s 26(2), the person operating the service is deemed to be the person causing the work or other subject-matter to be transmitted to the exclusion of any other person. Telstra would fall within the description of the person causing the work to be transmitted but under s 26(4) that term is to 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. Of course, Telstra has no agreements with callers who receive music on hold to provide them with that service. But they are deemed to be subscribers to that service under s 26(5) by reason of their being subscribers to the telephone service. The agreement to provide the telephone service must, in those circumstances, be deemed to extend to the provision of the diffusion service, for it is not possible to be a subscriber to a service in the absence of an agreement with a provider to provide it. It will be seen that by this means Telstra is deemed under s 26(5) to have agreed with subscribers to its telephone service to provide them with the diffusion service so that, under s 26(4), Telstra was the operator of the diffusion service by which the works were transmitted. Under s 26(2) Telstra was not only the operator of that service but the only operator of that service.

It follows that in each of the situations in which Telstra participated in the provision of music on hold to callers using conventional telephones, it was the operator of a diffusion service and the works were transmitted to subscribers to a diffusion service within the meaning of s 31(1)(a)(v) of the Act.

Mobile telephones: s 31(1)(a)(iv)

The remaining question is whether, by participating in the provision of music on hold to callers using mobile telephones, Telstra broadcast the works within the meaning of s 31(1)(a)(iv) of the Act. The term "broadcast" is defined by s 10(1) of the Act and means "transmit by wireless telegraphy to the public". "Wireless telegraphy" is also defined to mean "the emitting or receiving, otherwise than over a path that is provided by a material substance, of electromagnetic energy". Mobile telephones have a radio transmitter and a radio receiver by which communication is made to a nearby base station. Through the base station, radio transmissions to and from the mobile telephone are connected to the rest of the telephone network. When a caller from a mobile telephone hears music on hold, he has received a transmission, otherwise than over a path provided by a material substance, of electromagnetic energy, that is to say, by wireless telegraphy. The only issue is whether the transmission in question can be said to be "to the public".

Music on hold may be transmitted to mobile telephones from different base stations or, if the callers are in the same area, from the one base station using different frequencies. But at any one time only one caller may be receiving music on hold. At other times there may be considerably more callers hearing music on hold. The music is transmitted to each caller individually by means of his or her mobile telephone and the caller may receive it in private or domestic circumstances. The privacy of mobile telephone calls is protected by legislation ^[F3] . Different callers may call the number in question for different purposes. It is against this background that Telstra contends there is no transmission of music on hold "to the public" where the caller is using a mobile telephone.

Until 1986, "broadcast" was defined in s 10 of the Act to mean "broadcast by wireless telegraphy" and "broadcasting" had a corresponding meaning. The Copyright Amendment Act 1986 (Cth) added the words "other than from point to point" before the words "by wireless telegraphy". Section 10(1A) was also added and it provided that a broadcast was to be taken to be from point to point if it was intended by the broadcaster to be received only by particular equipment at a particular location.

There was a further amendment by the Statute Law (Miscellaneous Provisions) Act (No 2) 1986 (Cth). In introducing the Bill for that Act, the Attorney- General said in his second reading speech ^[F4] :

"The amendment will clarify the definition of 'broadcast', which was modified by the Copyright Amendment Act 1986, passed last sittings. Interested groups have submitted that the wording inserted by that Act is ambiguous, and does not express the Government's intention that 'broadcast', in this context, should cover transmissions to the copyright owner's public, whether the 'general' public or part of the public. Following consultations there is agreement with the policy and wording of the proposed new definition."

The Statute Law (Miscellaneous Provisions) Act (No 2) omitted s 10(1A) and replaced the definition of "broadcast" with the words which now appear in the Act, namely, "transmit by wireless telegraphy to the public". That definition removes from the definition of "broadcast" the word "broadcast" itself and replaces it with the concept of transmission to the public. That means that it is not helpful to resort to the ordinary meaning of the word "broadcast" in construing the definition. The addition of the words "to the public" was, if the Attorney-General's second reading speech is any guide, intended to incorporate the notion of the copyright owner's public.

The concept of the copyright owner's public was developed in a series of cases which, however, were concerned with the distinction between a performance in public and a private or domestic performance. Section 31(1)(a)(iii) speaks of the right to perform a work "in public", but the definition of "broadcast", with which we are concerned, speaks of transmission "to the public". If anything, the use of the words "to the public" conveys a broader concept than the use of the words "in public" since it makes clear that the place where the relevant communication occurs is irrelevant. That is to say, there can be a communication to individual members of the public in a private or domestic setting which is nevertheless a communication to the public. A broadcast by a radio station is just such a communication.

A performance or broadcast to the world at large is obviously a performance or broadcast to the public. But the situation becomes a little more difficult in the case of a performance or broadcast to a limited class of persons. In that context, in considering what constitutes a performance in public, the cases recognise that the relationship of the audience to the owner of the copyright is significant in reaching a conclusion. It is from this that the notion of the copyright owner's public developed. In Duck v. Bates ^[F5] Brett MR said:

"the representation must be other than domestic and private. There must be present a sufficient part of the public who would go also to a performance licensed by the author as a commercial transaction; otherwise the place where the drama is represented will not be a 'place of dramatic entertainment' within the meaning of the statute."

In Harms (Incorporated) and Chappell & Co v. Martans Club ^[F6] Lord Hanworth MR said:

"In dealing with the tests which have been applied in the cases, it appears to me that one must apply one's mind to see whether there has been any injury to the author. Did what took place interfere with his proprietary rights? As to that, profit is a very important element."

The idea of the copyright owner's public first explicitly emerged in Jennings v. Stephens ^[F7] where Greene LJ said:

"The question may therefore be usefully approached by inquiring 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. In other words, the expression 'in public' must be considered in relation to the owner of the copyright. If the audience considered in relation to the owner of the copyright may properly be described as the owner's 'public' or part of his 'public,' then in performing the work before that audience he would in my opinion be exercising the statutory right conferred upon him; and any one who without his consent performed the work before that audience would be infringing his copyright."

The view expressed by Greene LJ in Jennings v. Stephens was repeated by him in Ernest Turner Electrical Instruments Ltd v. Performing Right Society Ltd ^[F8] and was adopted by Luxmoore and Goddard LJJ, the latter adding that the relevant question is: "Is the audience one which the owner of the copyright could fairly consider a part of his public?" ^[F9] In Performing Right Society Ltd v. Harlequin Record Shops Ltd ^[F10] Browne-Wilkinson J also adopted the view of Greene LJ, saying that it is important to see whether the performance is given to an audience for performances to which the composer would expect to receive a fee, this being what he understood Greene LJ to have meant by the copyright owner's public.

In this country, the concept of the copyright owner's public was adopted in APRA v. Canterbury-Bankstown League Club Ltd ^[F11] and Rank Film Production Ltd v. Colin S Dodds ^[F12] . In the latter case the playing of films transmitted by a video cassette recorder to television sets in motel rooms was held to be "in public". Rath J observed ^[F13] :

"In the present case the motel guest in his room may easily be envisaged as part of the copyright owner's public. It is not the restricted size of the audience, or the privacy of the surroundings, that is decisive on the issue; the critical matter is the presentation of the movie by the occupier of the motel to his guest in that capacity."

The distinction between what is "in public" and what is "in private" is of little assistance in determining what is meant by transmission "to the public". The transmission may be to individuals in private circumstances but nevertheless be to the public. Moreover, the fact that at any one time the number of persons to whom the transmission is made may be small does not mean that the transmission is not to the public. Nor does it matter that those persons in a position to receive the transmission form only a part of the public, though it is no doubt necessary that the facility be available to those members of the public who choose to avail themselves of it. In Rank Film Production Ltd v. Colin S Dodds the number of guests playing films in their rooms may not have been large, but the motel was open to the paying public. Similarly, those members of the public who choose to call a relevant number on their mobile telephone may be relatively small, but the facility is available to members of the public generally.

What is important is the nature of the audience constituted by those who receive music on hold. 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. It is in a commercial setting that an unauthorised performance will ordinarily be to the financial disadvantage of the owner's copyright in a work because it is in such a setting that the owner is entitled to expect payment for the work's authorised performance. In this case it is not so much the preparedness of the audience of music on hold to pay to hear the works were it not for their unauthorised performance that is significant. That simple analysis belongs to an age where communications were less technologically advanced and business and marketing techniques were less developed. Rather, it is the preparedness of those who wish the music on hold to be played to bear the cost of the arrangement which provides the key, for it reveals the commercial character of the broadcast and the commercial deprivation suffered by the copyright owner. Callers on hold constitute the copyright owner's public, not because they themselves would be prepared to pay to hear the music, but because others are prepared to bear the cost of them having that facility. For the performance of the music to that audience the copyright owner would expect to receive payment, even if not from the members of the audience. For these reasons, we conclude that when the works were transmitted to persons using mobile telephones when placed on hold, in each of the three situations revealed by the evidence, they were broadcast within the meaning of s 31(1)(a)(iv).

We would dismiss the appeal.