Caswell v Sony/ATV Music Publishing - [2014] NSWSC 841 - NSWSC 2014 case summary — Zoe

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Caswell v Sony/ATV Music Publishing

[2014] NSWSC 841

Supreme Court of NSW|2014-06-24|Before: Pembroke J

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Court

Supreme Court of NSW

Decision date

2014-06-24

Before

Pembroke J

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Original judgment source is linked above.

Judgment (14 paragraphs)

[1]

Introduction 1The plaintiff is a professional songwriter who composed the musical piece known as 'On the Inside' in about 1978. It is the theme song for the television series 'Prisoner'. He contends that another musical piece known as 'Christmas in Dixie', which was created in 1982 by an American country music and southern rock band called 'Alabama', infringes the copyright in 'On the Inside'. His pleaded complaint is that the defendant (Sony) failed to take appropriate steps to protect the copyright in his song, including by instituting and prosecuting proceedings in the United States against the person or entity responsible for infringing the copyright. He contends that if Sony had done so, substantial damages would have been recovered; and that he would have been entitled to 50% of any such recovery. Independently of any specific contractual obligation that Sony may have owed to him, he contends that Sony was subject to 'a good faith obligation at large to do something'. Quite what this involved was somewhat opaque. Naturally, there is a preliminary issue as to whether in fact the copyright in the plaintiff's song was infringed by 'Christmas in Dixie', or whether it is reasonably arguable that it did so. 2Given the particular facts of this case, and the law applicable to a copyright infringement claim in the United States, the foundational factual issue is whether Sony was reasonably obliged, for the benefit of the plaintiff, to undertake uncertain litigation in a foreign jurisdiction against a putative copyright infringer, or to attempt to negotiate a resolution in good faith. This is the premise on which the plaintiff's case is built. I should add that there are several complicating factors, one of which is that Sony's parent (Sony US) owned the copyright in 'Christmas in Dixie', something to which I will later return.

[2]

Origin of Dispute - 2004/2005 3The origin of the dispute starts in December 2003, when the plaintiff became aware of 'Christmas in Dixie' and sent the track to Mr Trotter, Sony's managing director, with the comment that '[i]t seems a little blatant ... what do you think?' In January 2004 Mr Trotter referred the matter to his Sony US colleagues in these terms: Bit of a sticky one for you and would appreciate your thoughts. One of our local ATV writers Alan Caswell wrote the theme for a very successful Australia TV series called Prisoner which has been re-run for 20 odd years all around (t)he world. I've attached a copy of Alans theme song, Prisoner (On the Inside) as well as the Patti Page version (which was a hit on the Billboard Country Charts back in 1981), and the Alabama song Christmas in Dixie. Even though this Alabama version has been around since 1985 Alan has only just heard this for the first time and as you can imagine, he was shocked to hear the similarity between the 2 versions. The response was as follows: No question there is similarity. The 1, 2m, 5, 1 chord progression is used in a lot of songs, especially in the country ballad genre. And, of course the temp and lyric phrasing are similar, all adding up to what you hear. I don't know how a musicologist would define the similarity, but those are my observations. I do not think there was access and intent which constitute plagiarism by US law. Sorry the concern has arisen. I'm really not sure what to say beyond that. (emphasis added) 4Despite the cautionary warning about the possible absence of the requisite 'access and intent' under United States law, on 3 June 2004 Mr Trotter informed Mr Gilbey, who was effectively the plaintiff's agent, that he intended to approach a couple of musicologists so that 'hopefully we can get some definitive advice on where we next go'. 5In September, he instructed Sony's solicitors to refer the matter to a musicologist named Dr De Wilde. The De Wilde report is dated 17 September 2004 and its conclusion was as follows: These five similarities, if taken individually, would not suggest to me any claim of copying between the two works. For example, to consider only the harmonic progressions of the two works alone would not be conclusive, as the harmonic pattern is neither unique nor distinctive enough in-and-of-itself to suggest any connection between these two works or any others which might share similar harmonies. However, with the combination of these five items taken in total, it is my opinion that a case can be made that the two works share a level of similarity that goes beyond what I would consider to be random occurrence or sheer coincidence. In addition, the fact that the two works share these characteristics, especially the consistent and identifying opening rhythmic pattern which is repeated throughout, further reinforces my viewpoint that one work is reproducing a substantial part of the other work. (emphasis added) 6On 20 December 2004, Mr Trotter informed Mr Gilbey: I have the musicologists report and have had much correspondence with our lawyers and US principles (sic) over the past months in an effort to see what can be done to work this through. For various reasons it has proven difficult for us to get together to go over our options in regard to this issue and obviously with Christmas and holidays upon us its only going to become more difficult so I would suggest we at least try and discuss this matter over the phone this week. (emphasis added) 7Mr Trotter and Mr Gilbey then met on 11 February 2005. Counsel for the plaintiff accepted that the ownership by Sony US of the copyright in 'Christmas in Dixie' was probably made known to Mr Gilbey at this meeting or around this time. No complaint of conflict of interest was made or pleaded. Nor do I infer that, in an industry dominated by large music publishing houses, there was anything unusual in the situation that pertained as a result of Sony US owning the copyright in 'Christmas in Dixie'. 8At the meeting Mr Trotter provided to Mr Gilbey an estimated figure for earnings for 'Christmas in Dixie' over the past six years. The figure was US$20,000, which was almost certainly mistaken. It was not suggested however that the mistake was intentional. Mr Trotter added in an email a few days later that '[w]e have also been advised by our US principles (sic) that the six year statute applies in there as well, though if you believe differently, by all means get a second opinion'. 9On 3 March 2005, Mr Trotter caused the De Wilde report to be sent to Mr Gilbey, after which nothing further was heard - for four years. I should observe that there are several emails from Mr Gilbey asserting that he did not receive a copy of the De Wilde report in March 2005, but I am quite satisfied that he did. The person who physically sent the report by facsimile to Mr Gilbey gave unambiguous evidence of doing so and was not challenged. It is possible that Mr Gilbey may not have given a copy to the plaintiff.

[4]

The Contractual Relationship 13Unfortunately for the plaintiff, there is a threshold hurdle which he has not surmounted. The plaintiff's claim is based on the existence of a contract between him and Sony. This is not straightforward and the evidence is decidedly opaque. The position seems to be as follows. On 12 January 1979 the plaintiff entered into an agreement with ATV Northern Songs Pty Ltd (ATV). A copy of this contract cannot be located but I accept that it was in the same terms as another contract between the plaintiff and ATV entered into in 1980. 14That contract contained express terms as follows: 9. THE Publisher undertakes at its discretion to institute and prosecute any necessary action proceedings claim and demand against any person firm or company suspected of infringing the copyright in the Work and any damages recovered by the Publisher shall after deduction of costs and expenses be divided equally between the Publisher and Composer For the purpose of any such proceedings or otherwise the Composer will at the request of the Publisher at any time hereafter execute any instrument reasonably required by the Publisher for the purpose of confirming the Publisher's authority or title in respect of the Work ... 11. THE Publisher shall be entitled to assign the benefit of this Agreement and the copyright in the Work on condition that the Publisher shall not thereby be relieved of its obligations to the Composer hereunder. 15In 1994 ATV was de-registered. And in 1997 Sony was incorporated. It follows that the two entities never existed at the same time. It is not therefore possible to accept the plaintiff's pleaded allegation that in 1997, by novation or otherwise, '[ATV] ceased to be a party to the [plaintiff's] contract and the defendant became a party with materially the same rights and liabilities'. 16Similarly, there could not have been a direct assignment of the copyright in the plaintiff's song from ATV to Sony. There must have been an intermediate step involving a different entity. The evidence did not reveal what this was. Undoubtedly the plaintiff came to have some sort of relationship with Sony. Mr Trotter clearly assumed it. And Sony continued to pay royalties to the plaintiff for 'On the Inside'. But any common assumption does not assist the plaintiff to establish the contract. No estoppel is relied on. The critical pleaded allegation of 'novation, assignment or variation' was simply never established. 17That is enough by itself to dispose of the plaintiff's claim, but I propose to consider the merits of his case, assuming the existence of the contractual relationship for which he contends. To that end, Sony accepts that if there were a contract, it contained a term to the same effect as Clause 9 set out in paragraph [14] above; that Sony was subject to an implied duty to exercise its contractual discretion in good faith; and that the content of that duty required it to act honestly and reasonably.

[5]

Good Faith and Discretion 18The plaintiff's case that Sony failed to exercise its discretion at all, or failed to exercise it reasonably, depends on the inferences to be drawn from the De Wilde report, the email correspondence that I have summarised in paragraphs [3] - [12] and the unexplained absence of evidence from Mr Trotter. I will deal with each of those elements but I should first address the notion of 'good faith' and the legal principles relating to it. 19In the context of a case such as this, it should be recognised that good faith involves both subjective and objective elements. Honesty and reasonableness are usually both required; the one subjective and the other objective: Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 at 279C (per Handley JA); Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187 at [185]; Aiton v Transfield [1999] NSWSC 996 at [116]. The proper approach may sometimes be different when the issue arises in a statutory context, for example when determining whether a good faith defence has been established in response to a claimed contravention of Section 492T of the Anti-Discrimination Act 1977 (NSW): Sunol v Collier (No 2) [2012] NSWCA 44. However, I am satisfied in this case that the resolution of whether Sony failed to act in good faith by not taking certain action necessitates consideration of the objective facts, as well as the inferences about Sony's subjective intention to be drawn from the contemporaneous documents. 20In this case, the objective evidence made clear that the 'institution and prosecution' of copyright infringement proceedings by Sony would have been commercially and legally imprudent; and that a decision to refrain from doing so would have been justified and reasonable. There are a number of reasons for this, some of which I have summarised in paragraphs [21] - [31] below. The principal issue was the likelihood of success; something to which the warning in 2004 from Mr Trotter's US colleague about the apparent absence of 'access and intent' was relevant.

[6]

Copying - Access 21Among other things, Mr Zakarin explained that United States law requires actual copying by the infringer of 'original, copyrightable elements' in the musical work. Absent direct evidence of copying or proof that the two works are 'strikingly similar' - neither of which applies in this case - a plaintiff must demonstrate from circumstantial evidence that the infringer had access to the copyrighted work and that the two works are 'substantially similar': Jorgensen v EPIC/Sony Records, 351 F.3d 46, 51 (2d Cir. 2003); Lipton v Nature Co, 71 F.3d 464, 471 (2d Cir. 1995). 22The reasonable likelihood of access to the plaintiff's song for the purpose of copying was contradicted by Teddy Gentry, whose evidence, like that of Mr Zakarin, was unchallenged. Mr Gentry is one of the three founding members of the band 'Alabama'. He recalled with obvious and detailed affection, the circumstances of the creation of 'Christmas in Dixie' on a hot, mid-summer day in 1982 at Lookout Mountain in Alabama. He said that the first time he heard the plaintiff's song was many years later, in the Nashville office of Sony US, after the plaintiff had made a complaint. 23Mr Gentry is not a television watcher and I am satisfied that it is unlikely that he could have heard the plaintiff's song by picking it up from the theme music of episodes of 'Prisoner' that may have gone to air in the United States. He lives on a farm, the same farm on which his grandfather grew cotton. His childhood was oriented to the outdoors and there was a lack of emphasis on television. In fact, he said that his television exposure has been largely limited to news, weather 'and maybe some wrestling'. 24I accept that Mr Gentry is only one of three founding members of the band who collaborated on the composition of 'Christmas in Dixie' and that there was no evidence from the other band members. I also accept that there was evidence that Patti Page's cover version of the plaintiff's song charted on 18 July 1981 for six weeks at number 66 on the Country Chart of the Billboard Top 100 listing. But speculation is not evidence. It is no more than conjecture, without rational proof. 25The difference was well expressed by Buchanan J in Tisdall v Webber [2011] FCAFC 76 at [128] - [129]: [128] It is important to bear in mind also that the inferential process is not one where speculation, guesswork or mere assumption is accommodated. So far as the work of courts is concerned, where the application of a judicial method is expected, the process of drawing an inference from available facts is not to be equated with conjecture, surmise or guesswork. The arbitrary selection of one possibility over others from an available number of possibilities by such a method is not merely lacking in logic; it fails to conform to the necessity that inferences be drawn as matters of legitimate deduction, based on probative values. [129] In Bell IXL Investments Ltd v Life Therapeutics Ltd (2008) 68 ACSR 154; [2008] FCA 1457 Middleton J said (at [14]): In considering the material before the Court, the trier of fact must be careful to distinguish between inference and conjecture. A conjecture may be plausible, but it is effectively still a mere guess. An inference is a deduction from the evidence, and if reasonable can be treated as part of the legal proof to be considered in making a factual determination in any particular proceeding. Whilst sometimes it may be difficult to distinguish between conjecture and inference, nevertheless the distinction is an important one. See also Luxton v Vines (1952) 85 CLR 352 at 358. 26And the plaintiff's last minute election not to challenge Mr Gentry, despite the Court, at the plaintiff's request, putting in place administrative arrangements to enable his counsel to do so by video link, fortifies me. I have reached the conclusion that any inference of access is too ephemeral. It is insufficient to base a finding of copying for the purpose of United States law. And, for the reasons explained below, I do not think that the essential requirement of substantial similarity has been satisfied.

[7]

Copying - Substantial Similarity 27I prefer the conclusions and reasoning of Mr Ricigliano to those in the De Wilde report in relation to substantial similarity. They satisfy me that it was reasonable not to take action to attempt to protect the copyright in the plaintiff's song. The De Wilde report addressed similarity only in a broad sense, without appearing to recognise that infringement can only occur in relation to an element of the original work that is unique and therefore 'copyrightable'. This is understandable given that Dr De Wilde is not a lawyer and did not appear to have any experience or expertise in connection with musical copyright infringement actions in the United States. 28Mr Zakarin explained the practical difficulty of proving substantial similarity as follows: Because musical works operate with a limited number of notes and sequences of notes that are pleasing, the courts have come to recognize the significance of prior art and that there are commonly used sequences of notes which do not connote infringement. As a result, in musical infringement cases, a plaintiff will often have to establish some unique signature of combination contained in its work that has been copied by the defendant in order to create a triable issue of probative similarity. 29He added that, for that reason, 'in the context of two musical compositions (as opposed to the unlicensed taking of songs), it has proved very difficult for plaintiffs to prevail in musical copyright infringement cases'. I am satisfied that that warning is apposite in this case. 30The true explanation of the provenance of 'Christmas in Dixie' is probably to be found in the song itself, and in Mr Ricigliano's detailed musical analysis of it. Like that of Mr Zakarin, his evidence was also not challenged. He concluded that any similarities between the plaintiff's song and 'Christmas in Dixie' are: ... the result of the composer of each song coincidentally choosing common musical ideas or melodic units and utilising them in a similar structural design, and not the result of copying. 31He explained that the chord pattern which is a central element of both songs is 'one of the most basic and common harmonic patterns in all music' and that its use may account for certain similarities between the melodies in each song. He concluded that 'any musical similarity between these works appears to be coincidental rather than a result of copying'. There was no contradictory evidence; no relevant attempt to challenge Mr Ricigliano in cross-examination; and no submission that I could not accept his evidence.

[10]

The Email Correspondence 37I have reached the same conclusion about the evidence of Sony's conduct revealed by the contemporaneous email correspondence. There was no failure by Sony to exercise its discretion and, in the circumstances, nothing unreasonable, or lacking in good faith, in the way the discretion was exercised. After the plaintiff raised the issue, Sony investigated the question. It commissioned, and no doubt paid for, the De Wilde report. Mr Trotter, Sony's managing director, reached the view that damages would be minimal. He invited the plaintiff to obtain a different opinion on the applicable limitation period. By December 2004 Mr Trotter had had 'much correspondence with our lawyers and US principles (sic) ... to see what can be done to work this through'. 38Mr Gilbey, the plaintiff's agent, sought and obtained a copy of the De Wilde report. He said that the plaintiff would be better appraised when he had reviewed the report. The report was delivered on 3 March 2005. There was no response from the plaintiff or Mr Gilbey for over four years. Neither gave evidence to explain his conduct or reasoning. One available inference is that they were satisfied at that time that any action by Sony was not warranted and could not be justified. 39When the plaintiff unexpectedly re-agitated the issue in 2009, Mr Trotter's responses revealed more information supporting the reasonableness and bona fides of Sony's conduct; conduct that amounted to an actual exercise of its discretion. Mr Trotter reiterated that, even if an action were instituted, any damages would be minimal and would not cover the cost of litigation. In any event, he had formed the view that the plaintiff, with the advice of Mr Gilbey, had decided not to pursue the matter. Nothing had relevantly changed. There was no obligation on Sony to re-visit the exercise of its discretion made in 2004/5 simply because of the plaintiff's April 2009 letter. In my view, the contemporaneous evidence goes nowhere near supporting the inference for which the plaintiff contends, namely that Sony failed to exercise its discretion or exercised it unreasonably.

Caswell v Sony/ATV Music Publishing

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