have been talking about HDTV for to treat the existing free-to-air stations significance of the national broadcasters, decades - successive improvements in the equally, promising each a digital channel. the ABC and the SBS, to our television black and white days were thought of as Yet the reality is that this can only be culture. They need to be given a central ‘high definition’ at the time. When the achieved if there is shuffling around. I place in any future television technologies that now bear the name don’t understand all the technical issues, transmission system. The ABC, the SBS, ‘HDTV’ began to be developed, the goal but I’m troubled at the implications that the Ten Network - I’m not at all averse to was cinema quality pictures and CD- Channel 10, the most vulnerable the vulnerable getting a leg up. If the quality sound. The problem is, cinema- commercial broadcaster in a multi­ strong complain, we can always tell them qual ity pictures have got better and better, channel environment, will need to shift to bugger off. and cinema sound is now capable of way frequencies - a fairly inequitable outcome, more dramatic things than simple home in a vision which is entirely based on CDs. Further, the cinema has reinvented equity for existing players. This is the full text of a speech given by itself as a social experience, totally Jock Given, Director, Communications differentiating itself from the experience Law Centre, UNSW at the J1C Conference of even high resolution audiovisual ROLE OF NATIONAL in Sydney on 13 August 1997. entertainment in the home. I simply don’t BROADCASTERS believe a substantial share of consumers are going to think HDTV alone is worth It’s worth noting that in the UK, the BBC many dollars to them. has been given the DTT multiplex with the best reach. One of the most important Finally, the ABA report seems to have things that needs to happen with DTT in problems even on its own terms. It tries is a restatement of the enduring

Telstra v APRA - Implications for the

Simon Gilchrist examines recent High Court decision and the implications for Internet service providers in terms of their liability for infringement of copyright on-iine

he recent High Court of Australia ’s involvement in the provision of Telstra was liable for that infringement. case on the liability of Telstra for music on hold occurs the following ways: APRA is for all practical purposes the the playing of music on hold owner of the diffusion right in all musical T(Telstra Corporation Limited (a)v an organisation plays music to its works in which copyright subsists. Australasian Performing Right callers that it puts on hold. In this case Association Limited (14 August 1997)) Telstra’s only involvement is the The High Court accepted APRA’s has immediate implications for the operation of the arguments. (The trial judge found for development of the Internet industry in system. Telstra {(1993) 118 ALR 684; (1993) 27 Australia. 1PR 357; (1993) 46FCR 131) but APRA (b) Telstra plays music to callers to its successfully appealed to the Full Federal At its broadest, the case imposes strict service centres that it puts on hold. Court ((1995) 131 ALR 141) and the High liability on Internet Service Providers Court rejected Telstra’s appeal.) (ISPs) for the transmission of copyright (c) Telstra provides its CustomNet service material to their customers - even to certain customers. The CustomNet The case focused on the meaning of the material over which they have no control service is a call managing system. As diffusion right, which is defined in and no knowledge. This has exposed all part of the service Telstra provides section 26 of the Copyright Act - one of Australian based ISPs to the very real risk music on hold to callers to CustomNet the less clear sections of the that Act. The of being at the receiving end of legal customers that are put on hold. owner of the diffusion right in a work has proceedings. the exclusive right to object to the In each of the above circumstances, music transmission of the work to subscribers is played either via a CD or tape player to a diffusion service. or via a radio receiver. BACKGROUND TO THE CASE Section 26 provides that “the transmission of material to subscribers to The proceedings were brought by APRA THE CLAIM a diffusion service” means the (an Australian collecting society for transmission by wire of the material in musical works) against Telstra (one of the APRA commenced proceedings in the the course of a service of distribution of general telecommunications carriers) Federal Court of Australia against Telstra broadcast or other material (whether over the issue of who, if anyone, should arguing that the transmission of music provided by the person operating the be liable for the music transmitted over in each of the above circumstances service or not) to the premises of the general telecommunications network constituted an infringement of its subscribers to the service. as “music on hold”. diffusion right in the music and that

Page 10 Communications Law Bulletin, Vot 16 No 31997 The person liable for the transmission of that he or she was not aware and had no customers. This material consists of e­ material to subscribers to a diffusion reasonable grounds for suspecting that his service is the person operating the service. mails sent to the ISP’s customers, or her acts would constitute an messages posted to news groups and That person is deemed to be the person infringement of copyright), the owner of who enters into agreements with viewed by the ISP’s customers, computer copyright is only entitled to an account files stored on FTP sites and down loaded subscribers and undertakes to provide of the infringer’s profits. Damages are by the ISP’s customers, or web pages them with the service (regardless of typically larger than an account of profits. whether he or she is the person who viewed by the ISP’s customers. In short In addition, it is usually difficult, time all of these activities involve the transmits the broadcast or other material). consuming and therefore expensive to transmission of material from the Internet Section 26(5) provides that where the quantify an account of profits. diffusion service is incidental to or part to the computers of the ISP’s customers. of a service of “transmitting telegraphic Some of this material is either created by The High Court did, however, accept the ISP or is created by the ISP’s or telephonic communications”, a Telstra’s defence in relation to the subscriber to the telegraphic or telephonic customers and stored by the ISP on its transmission of music that originated servers (such as web sites that the ISP service is deemed to be a subscriber to from a radio broadcast. This is a technical the diffusion service. hosts). The majority of the material, defence which was primarily designed to however, is originated by third parties allow cable operators to re-transmit free Telstra argued that it did not have who have no connection with the ISP or to air broadcasts. its customers (other than being physically agreements with its customers to distribute music to them. It argued connected to the Internet). therefore that there was no transmission IMPLICATIONS FOR ISPs of music to subscribers to a diffusion The majority of this material is protected service. by copyright, this includes not just literary This case has direct implications for ISPs. works but also images, music and video. It would appear from the case that an ISP The High Court held that the diffusion that unwittingly transmits unauthorised In many circumstances the owner of service does not need to be for the copyright material from the Internet to a copyright has consented to the transmission of the copyright material, customer’s computer will be directly but can be for the transmission of other transmission of its material over the liable for the infringement of copyright Internet - that is the purpose of the material, in the course of which copyright caused by that transmission. Internet. The act of placing copyright material is transmitted. The High Court material on the Internet in all likelihood deemed Telstra to have agreements in An ISP’s primary function is to transfer place with each of its customers for the constitutes an implied licence to anyone material from the Internet to its to transmit, view and/or listen to the provision of a service - being music on hold. It did this by holding that music on hold was a service and deeming Telstra to have agreements with each of its subscribers to provide that service. It therefore found Telstra liable.

The critical step in the High Court’s reasoning was that Telstra had agreements with each of its customers to provide (incidental to or as part of the service of transmitting telegraphic or telephonic communications) a service of distribution of broadcast or other matter to the premises of the customers.

There is no element of intent or knowledge in copyright infringement proceedings. If a person does an act comprised in the copyright in a work without the authority of the owner of copyright, he or she infringes copyright ~ regardless of whether he or she knew or ought reasonably to have known that their acts would constitute an infringement of copyright. An infijnger’s state of mind, however, is relevant when determining the monetary remedy that the infringer should pay. The basic rule is that an infringer must pay either damages or an account of profits. The owner of copyright is entitled to choose what method generates the highest dollar figure. If, however, an infringer can prove that he or she infringed copyright innocently (i.e.

Communications Law Bulletin, Vol 16 No 3 1997 Page 11 material. A licence does not need any have an APRA licence. But these types transmit. If an ISP can show that it did formalities, it can be implied. of blanket licences are not available for not monitor or control what it transmitted all classes of copyright material. For to customers, it may be able to succeed In certain circumstances, however, the example, there is equivalent of APRA for on an argument that it was an innocent copyright owner will not have consented photographs. In other cases only an infringer. This would limit a copyright to the placement of its material on the incomplete licence is available. For owner’s remedy to an account of profits. Internet. From the reasoning in the example, the Copyright Agency Limited An individual copyright owner may think Telstra v APRA case it appears that if an (CAL) may be able to grant on-line twice about commencing proceedings if ISP transmits copyright material to its licences for some of the literary works all it stands to gain is an account of customers in the course of transmitting controlled by it but not others. As a profits. A collecting society, however, other Internet content, that transmission practical matter, therefore, an ISP can would still stand to recover significant is a “transmission to subscribers to a only obtain licences for certain types of sums given the number of copyright diffusion service”. In those copyright material. The Telstra v APRA owners it represents. circumstances, the unauthorised case, however, together with the growth transmission of that material from the of the Internet may be the impetus for Of concern to the development of the Internet to an Internet user’s computer many owners of copyright to appoint Internet in Australia is the possibility that will constitute an infringement of the collecting societies to collect royalties ISPs and similar businesses will engage diffusion right in the material. from ISPs and similar organisations on in a form of risk arbitrage and avoid their behalf. basing themselves in Australia. Even if It also appears that an ISP would be this does not strictly speaking serve to directly liable for the infringement of An ISP cannot “contract out” its shield offshore ISPs from liability, a local copyright in the above circumstances. obligations by stating in its agreements copyright owner may be less inclined to This is because it is the person who has with its customers that it will not be liable take action against them. agreements with its customers to transmit for any infringement of copyright of Internet material to them. Section 26(5) which it is not aware. Its liability may This case and the risk that it imposes on does not apply because the service of only be waived by the owner of the Telstra and ISPs is likely to be the impetus transmitting Internet material is not “only infringed copyright material. An ISP can, for the Federal Government to amend the incidental to, or part of, a service of however, attempt to shift its monetary Copyright Act to clarify whether and if transmitting telegraphic or telephonic exposure via contract. An ISP can seek so when carriers and ISPs should be liable communications”. to obtain indemnities from its customers for the unauthorised transmission of in respect of any material that those copyright material by them. This is This is the case regardless of whether the customers post to the Internet, for particularly the case given the ISP example, material that a customer Government’s desire to maximise the includes in a web site hosted by the ISP value of Telstra in the upcoming float. (a) agreed to transmit the copyright or material that a customer posts to a news The Federal Government has released a material; group. As a matter of course an ISP discussion paper on the reform of the should obtain indemnities from its diffusion right “Copyright Reform and (b) originated any of the copyright customers for any liability that the ISP the Digital Agenda” (http:// material; may incur as a result of material posted www.dca.gov.au/pubs/digital.html). It on the Internet by its customers, whether has proposed that ISP’s only be liable for (c) had any knowledge of the existence for infringement of copyright or other unauthorised transmissions that they of the copyright material; or intellectual property' rights or defamation “authorised”. Whilst this is not an entirely or otherwise. satisfactory solution, it should assist most (d) had any way to prevent the ISPs. Any reforms, however, are likely transmission of the copyright An ISP could also seek to obtain to take a significant amount of time before material. indemnities from the other ISPs that it being agreed on and enacted. connects to. An ISP’s only connection to In other words the ISP faces strict liability. the Internet is via other ISPs - that is the In the meantime, unless they take nature of the Internet. Those ISPs are, appropriate steps, ISPs should expect to The ISP is primarily liable for the however, unlikely to provide such start receiving polite but firm letters of infringement. The copyright owner is not indemnities. In certain limited demand from copyright owners and their required to take any action (or even circumstances an ISP may be able to lawyers. OzEmail, one of Australia’s identify) the person who place the commence proceedings against the largest ISPs, is already in court with copyright material on the Internet. person who placed the unauthorised APRA for alleged infringement of material on the Internet or the ISP that copyright in musical works. originally hosted the material. But this STEPS AN ISP CAN TAKE would depend on the ISP being able to identify the person, being able to Simon Gilchrist is a lawyer at Gilbert & The only way an ISP can totally avoid overcome any jurisdictional hurdles if the Tobin. liability is to obtain licences from person is located outside Australia and copyright owners. In the case of some being able to recover any judgment classes of copyright material this is against the person. relatively straightforward (but not necessarily cheap). For example, APRA At a practical and immediate level, can grant licences in respect of virtually however, this decision will encourage all musical works in the world. Most ISPs to take a totally “hands-off’ business that play or broadcast music approach to the material that they

Page 12 Communications Law Bulletin, Vol 16 No 3 1997