Haddad v Foxtel Management Pty Ltd [2008] FCAFC 11 | Case summary

Judgment (7 paragraphs)

[1]

REASONS FOR JUDGMENT HEEREY AND MCKERRACHER JJ: 1 The appellant, along with others, was found to have been involved in the commission of flagrant breaches of Pt VAA of the Copyright Act 1968 (Cth) by unauthorised use of Foxtel smartcards: Foxtel Management Pty Limited v The Mod Shop Pty Limited [2007] FCA 463. 2 The sole ground of appeal is the argument that Foxtel did not make an "encoded broadcast" within the meaning of s 135AL of the Copyright Act. Relevantly for present purposes that definition refers to a broadcast … that is made available only to persons who have the prior authorisation of the broadcaster and only on payment by such persons of subscription fees (whether periodically or otherwise). (emphasis added) 3 The evidence was that Foxtel made its broadcasts available without charge to certain of its employees and contractors, to certain "complimentary account holders", being (i) persons with senior roles within Foxtel's shareholder corporations and persons with a commercial connection to Foxtel's business, and (ii) "opinion leaders", persons whose office or position in the community was of significance to Foxtel's business. In addition, broadcasts were made available without charge to a number of unidentified charitable organizations and children's hospitals. 4 As at 2 December 2005 Foxtel had 1,023,000 monthly paid subscribers. The qualifying employees and contractors numbered 2,769 and the complimentary account holders 437. There was no evidence as to the number of charitable institutions and children's hospitals, but they must have been a limited class. 5 On the hearing of the appeal counsel for the appellant did not rely on employees or contractors ( "Foxtel insiders" ) as being members of the public. 6 The short answer of Foxtel, with which we agree, is that to have an "encoded broadcast" there must first be a "broadcast". The latter term is defined in s 10(1) to mean … a communication to the public delivered by a broadcasting service within the meaning of the Broadcasting Services Act 1992. (emphasis added) 7 In the Broadcasting Services Act "broadcasting service" is defined to mean a service that delivers television programs or radio programs to persons having equipment appropriate for receiving that service, whether the delivery uses the radiofrequency spectrum, cable, optical fibre, satellite or any other means or a combination of those means, but does not include: (a) a service (including a teletext service) that provides no more than data, or no more than text (with or without associated still images); or (b) a service that makes programs available on demand on a point-to-point basis, including a dial-up service; or (c) a service, or a class of services, that the Minister determines, by notice in the Gazette, not to fall within this definition 8 Section 11 sets out specified categories of broadcasting services , including: (d) subscription broadcasting services 9 "Subscription broadcasting services" are defined in s 16 as broadcasting services that: (a) provide programs that, when considered in the context of the service being provided, appear to be intended to appeal to the general public; and (b) are made available to the general public but only on payment of subscription fees (whether periodical or otherwise); and (c) comply with any determinations or clarifications under section 19 in relation to subscription broadcasting services. (emphasis added) 10 The rationale behind these definitions is that a subscription broadcasting service is to be treated differently from a free to air broadcasting service, which by necessity is freely available to anyone with a receiving device within the area of transmission. 11 Transmissions to a small or limited group of persons, chosen for commercial or philanthropic motives by Foxtel, would not be a communication to "the general public". 12 Some assistance by way of analogy is provided by the High Court's decision in Corporate Affairs Commission (South Australia) v Australian Central Credit Union (1985) 157 CLR 201. The issue there was whether an offer of units in a unit trust to the members of the Credit Union, totalling about 23,000, was "an offer to a section of the public". In holding that it was not Mason ACJ, Wilson, Deane and Dawson JJ said at 208: The question whether a particular group of persons constitutes a section of the public for the purposes of s.5(4) of the [Companies (South Australia)] Code cannot be answered in the abstract. For some purposes and in some circumstances, each citizen is a member of the public and any group of persons can constitute a section of the public. For other purposes and in other circumstances, the same person or the same group can be seen as identified by some special characteristic which isolates him or them in a private capacity and places him or them in a position of contrast with a member or section of the public. In a case where an offer is made by a stranger and there is no rational connexion between the characteristic which sets the members of a group apart and the nature of the offer made to them, the group will, at least ordinarily, constitute a section of the public for the purposes of the offer. If, however, there is some subsisting special relationship between offeror and members of a group or some rational connexion between the common characteristic of members of a group and the offer made to them, the question whether the group constitutes a section of the public for the purposes of the offer will fall to be determined by reference to a variety of factors of which the most important will ordinarily be: the number of persons comprising the group, the subsisting relationship between the offeror and the members of the group, the nature and content of the offer, the significance of any particular characteristic which identifies the members of the group and any connexion between that characteristic and the offer. 13 In the present case, the complimentary account holders and the charitable institutions and hospitals had a rational connection or relationship with Foxtel. They were not members of the public, like, for example, all residents of a particular town. Still less were they "the general public". They were few in number compared with ordinary paid subscribers. 14 Parliament is not to be taken as having intended a provider of subscription broadcasting services to lose that character because it engaged in the common kind of promotional and philanthropic activities as occurred in the present case. Counsel for the appellant suggested that the hardship that would arise from his construction where Foxtel wished to provide broadcasts to children's hospitals could be overcome by charging one dollar for, say, ten years subscription. In our view, the need to resort to such an artificial device points in favour of a construction that would simply treat such bodies selected by Foxtel as not "the public". 15 The appeal should be dismissed with costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Heerey and McKerracher.

REASONS FOR JUDGMENT SACKVILLE J 16 These proceedings were commenced by the present respondents (together 'Foxtel'), against ten parties, including the appellant. The second respondent ('Foxtel Cable') holds a subscription broadcasting services licence pursuant to the Broadcasting Services Act 1992 (Cth) ('Broadcasting Services Act'). The first respondent ('Foxtel Management') is the exclusive agent for the operation of the Foxtel subscription television network. Foxtel Cable, at the material times, provided the only satellite-delivered, licensed subscription television broadcasting service to domestic subscribers in Perth. 17 The appellant and the other nine parties sued by Foxtel either carried on businesses under the name 'Mod Shop' at various premises in Perth or were associated with those businesses. Foxtel relied principally on causes of action under s 135AN of the Copyright Act 1968 (Cth) ('Copyright Act'). Section 135AN was located in Part VAA of the Copyright Act, which was repealed by the Copyright Amendment Act 2006 (Cth). However, s 135AN was in force at the material times. 18 Section 135AN applied if a 'broadcaster ma[de] an encoded broadcast' and if a person did any one of a series of enumerated acts without the permission of the broadcaster: s 135AN(1). The enumerated acts included selling or distributing a 'broadcast decoding device for the purposes of trade'. Foxtel's case was that the parties sued by it had been engaged in so-called 'smartcard piracy'. The Mod Shops were alleged to have assisted in the supply of pirated smartcards to customers, thereby enabling them to obtain access to the Foxtel subscription television service without paying subscription fees. 19 Foxtel settled its claim against three parties prior to the hearing before the primary Judge. Only one of the other parties sued appeared to defend the proceedings. The appellant did not appear at the hearing, but had previously filed a motion seeking to strike out the statement of claim on the ground that Foxtel was not a broadcaster which made an 'encoded broadcast' within the meaning of s 135AN of the Copyright Act. 20 Notwithstanding the appellant's non-appearance, the primary Judge addressed the question of construction raised by the appellant's motion. His Honour rejected the appellant's contention, holding that Foxtel satisfied the terms of s 135AN. His Honour went on to make orders against all the parties sued, by reason of their various contraventions of the Copyright Act. The orders included an award of $300,000 by way of additional damages against the appellant on the basis of a finding that: 'for commercial gain, he had deliberately embarked upon a business strategy aimed at infringing the rights of [Foxtel]'. 21 The only ground of appeal relied on by the appellant raises the same issue as his strike out motion, namely that Foxtel did not make an 'encoded broadcast' within the meaning of s 135AN of the Copyright Act. 22 The expression 'encoded broadcast' was defined in s 135AL of the Copyright Act, the relevant terms of which are extracted in the judgment of Heerey and McKerracher JJ. When par (a) of the definition of 'encoded broadcast' in s 135AL of the Copyright Act is read together with the definition of 'broadcast' in s 10 (as the Copyright Act stood at the relevant time), the definition of 'encoded broadcast' was as follows: 'a broadcast, being a communication to the public delivered by a broadcasting service within the meaning of the Broadcasting Services Act, that is made available only to persons who have the prior authorisation of the broadcaster and only on payment by such persons of subscription fees'. 23 It is necessary to take into account on the construction issue the fact that Foxtel Cable held a subscription broadcasting services licence under the Broadcasting Services Act. The expression 'subscription broadcasting services' was (and is) relevantly defined in s 16 of the Broadcasting Services Act to mean: 'broadcasting services that (a) provide programs that … appear to be intended to appeal to the general public; and (b) are made available to the general public but only on payment of subscription fees …' 24 As Mr Cobden, who appeared on behalf of Foxtel, pointed out, the Broadcasting Services Act distinguishes between providers of free-to-air broadcasting services (whether they be national or commercial broadcasters) and providers of subscription broadcasting services. The definition of 'subscription broadcasting services' in s 16 of the Broadcasting Services Act is part of a legislative scheme designed to ensure that subscription broadcasters do not trespass into the territory serviced by free-to-air broadcasters. That appears to explain the use of the expression 'the general public' in the definition of 'subscription broadcasting services'. 25 In my opinion, the provision of the Foxtel broadcasting service to a limited number of persons, specifically chosen by it for commercial or philanthropic reasons, is not a communication to the public for the purposes of the definition of 'encoded broadcast'. It is true that the programs broadcast by Foxtel as part of its subscription broadcasting service constitute a communication to the public, in the sense that members of the general public are invited to subscribe to the Foxtel service by agreeing to pay the fees Foxtel charges for that service. However, that does not mean that the provision of the Foxtel service to a recipient necessarily constitutes a communication to the public in all circumstances. 26 An example is the provision of the service to limited classes of people having a prior association with Foxtel, such as employees or contractors. In my opinion, this does not constitute a communication to the public because the recipients are not provided with the service in their capacity as members of the general public. They are provided with the service because they are employees or contractors of Foxtel and it is in that capacity that they receive the Foxtel programming free of charge. Mr Nash, who appeared on behalf of the appellant, did not dispute this conclusion. 27 In my opinion, the provision of the Foxtel broadcasting service to a small number of individuals selected by Foxtel on the basis of commercial or philanthropic considerations, also cannot be said to be a communication to the public for the purposes of the definition of 'encoded broadcast'. Foxtel makes its service available free of charge to selected persons or outlets (such as hospitals) by reason of particular characteristics of the individual persons or outlets. For example, the Foxtel service is made available to a limited number of 'opinion leaders', presumably because each is thought by Foxtel to be likely to assist Foxtel's business in some way. The service, in these circumstances, is not a communication to the general public or a section of the general public. It is a communication to a limited number of individuals selected by Foxtel by virtue of particular characteristics that Foxtel deems to be significant to its commercial operations. 28 Mr Nash argued that this construction would deprive the latter part of par (a) of the definition of 'encoded broadcast' of any meaning. In my view, that is not so. If, for example, Foxtel allowed all residents of a particular area to subscribe to its programming without charge, that would take Foxtel's programming outside the definition of 'encoded broadcast'. The recipients of such an offer would not be selected by reason of a prior association with the broadcaster or by reason of particular characteristics that each recipient possesses individually. Rather they would be offered the service in their capacity as members of the general public. Such a conclusion would be consistent with the legislative purpose of distinguishing between the services provided by free-to-air broadcasters and subscription broadcasters. 29 Mr Nash sought to draw some comfort from the fact that the Copyright Amendment Act 2006 (Cth) repealed Part VAA, including the definition of 'encoded broadcast'. The substituted definition now omits any reference to the broadcast being made available only on payment by authorised persons of subscription fees. However, as Mr Cobden submitted, the amendment is consistent with Parliament deciding to remove doubt as to the proper interpretation of the definition. In any event, the omission of the second requirement sheds no light on the proper interpretation of the definition in its unamended form. 30 I agree that the appeal should be dismissed, with costs. I certify that the preceding fifteen (15) numbered Paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

Haddad v Foxtel Management Pty Ltd

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