Hamm v Middleton

EX TEMPORE REASONS FOR JUDGMENT 1 The defendant has pleaded guilty on three charges for offences against the provisions of the Copyright Act 1968 (Cth). The offences arise out of the parallel importing into Australia by him of laser video discs containing cinematographic films. It appears from the undisputed facts that from 1991 until the intervention of the enforcement authorities in October 1995, the defendant was conducting a business in South Australia which traded as The Laser Disc Shop through a company, Hindmarsh Gas Centre Pty Ltd. The Laser Disc Shop was conducted as an adjunct to the business of Hindmarsh Gas Centre Pty Ltd which sold and hired gas and electrical equipment. The defendant, as the moving force behind the company, perceived there to be an opening for the distribution of laser video discs of the kind in question, imported from America. He embarked upon obtaining such discs from America and retailing them in Adelaide. 2 On 23 October 1995 an officer from the Australian Film and Video Security Office attending at The Laser Disc Shop acquired two laser video discs. One of those discs is the subject of the first charge in point of time, which alleges that on 23 October 1995 the defendant was knowingly concerned in the commission of an offence against s 132(1)(b) of the Copyright Act 1968 by Hindmarsh Gas Centre Pty Ltd which sold the offending disc: Information number SG 121 of 1998. 3 On 26 October 1995 a search warrant was executed at the premises of The Laser Disc Shop and a considerable number of infringing laser video discs were located and seized. Twenty-one of those discs containing eight different film titles are the subject of Information number SG 120 of 1998. The defendant is charged with being knowingly concerned in the commission of an offence by Hindmarsh Gas Centre Pty Ltd contrary to s 132(2A)(a) of the Copyright Act 1968 in that the company had in its possession the offending discs for sale or hire by way of trade. 4 On 27 October 1995 another search warrant was executed at the office of Air Express International where a further batch of infringing laser video discs were seized, including fourteen discs containing the film Rob Roy which now form the subject of Information number 122 of 1998. That information charges the defendant with being knowingly concerned in an offence by Hindmarsh Gas Centre Pty Ltd contrary to s 132(1)(d)(i) of the Copyright Act 1968 in that the company imported into Australia the offending articles. Air Express International is a customs agent that was clearing the discs for Hindmarsh Gas Centre Pty Ltd. It will be noted that the defendant was not involved in importing the discs in a surreptitious manner, intended to conceal the activity from the authorities. The importation was being done in an open way through recognised channels, the discs having been purchased apparently from an authorised distributor of the discs in the United States. 5 It is put in submissions by counsel for the defendant, and not disputed by the prosecutor, that the defendant was acting under the mistaken belief that what he was doing was not unlawful. That was a foolhardy view for him to hold because he had been warned on earlier occasions that the importation of the discs purchased from a distributor in America was an offence against the provisions of the Copyright Act 1968, and that the discs would constitute infringing material. 6 On 20 March 1992 the director of the Australian Film and Video Security Office had sent the defendant a letter formally warning him of the possible consequences of engaging in the practice of parallel importing of laser video discs and the unauthorised sale or hire of them. On 28 April 1992, a Mr Taylor from the same organisation had attended The Laser Disc Shop and had spoken to the defendant. The defendant confirmed that he had received the correspondence of 20 March 1992. He said that he had received some advice about the importing of the discs and that he intended to continue to import the discs. At that time he declined to name the provider of the advice. I infer that he was informed again by Mr Taylor that what he was proposing to do would bring about contraventions of the copyright in the work embodied in the discs. 7 Through his counsel the defendant has informed this Court that he held the belief that what he was doing was lawful, notwithstanding the warnings, because he observed that there were other shops elsewhere in Australia distributing similar discs imported from America, apparently without any intervention from any authority enforcing the Copyright Act 1968 and that he perceived the officers of the Australian Film and Video Security Office to have a self-interest in the matter. Put bluntly, he did not accept that what he was being told was correct. 8 The Australian Film and Video Security Office is an office established for the purposes of protecting the interests of copyright holders. Those are important interests created to protect the intellectual effort of the authors who have created the copyright work. The monopoly of the copyright is intended to give the authors a fair return for their effort, and to provide a market incentive for authors to continue to create new works for the public benefit. 9 The copyright work in the laser video discs the subject of the charges gave the copyright holder the exclusive right to authorise or withhold authorisation for the further reproduction and distribution of discs in countries around the world. In this case the authorisation to sell discs of the kind in question had been granted to other distributors in Australia and accordingly the activities of the defendant were likely to cause loss to those distributors and to impinge upon their business conducted under appropriate arrangements with the copyright holder. 10 In this case the discs were purchased in a bona fide way from a distributor in the United States. It is to be inferred from that that the author or producer of the films (the holder of the copyright) has received a royalty in respect of the particular discs. The victims in this case are the Australian distributors rather than the copyright holders, but nevertheless the infringement is clearly contrary to the Copyright Act 1968. 11 Section 133 imposes substantial penalties in respect of copyright infringements in relation to cinematographic films. The Act itself indicates a legislative intention that infringements of the copyright in films are to be treated as serious offences, and I must impose penalty having regard to that statement of legislative intent. 12 It is not disputed that in consequence of the raids conducted under the authority of the search warrants in the order of 1086 laser video discs which the defendant, through his company, had purchased were seized. It is not disputed that the Court should now make an order under s 133(4) directing that those discs be delivered up to the owners of the copyright concerned. 13 It is asserted by the defendant that he has lost something in the order of $50,000 being the value of the seized copyright material. I note that, but I do not think that it is a matter that I am permitted or should take into account in fixing the penalty. These discs are infringing goods. If these were civil proceedings brought to enforce copyright, there would be an order made for the delivery up of the goods without any account being taken of the value of them. They are goods that were unlawfully in the possession of the company for the purpose of sale, and in my view they should be delivered up without there being any consequent account of their value taken in fixing the penalty. Moreover, in this case there would be the further difficulty in taking the value into account because the goods were the property of the company, and the defendant is charged only with being knowingly involved in the commission of the offence. 14 The seizure of the discs, however, had the effect that the defendant ceased to carry on the business of The Laser Disc Shop. He has also been in ill health since the offences. He is now aged fifty-seven and it is put to me by counsel on his behalf that there is no prospect of him going into that type of business again, and indeed, he has not sold or displayed for sale or hire infringing material since the date of the discovery of the offences. I accept that submission. 15 Although there were a considerable number of infringing discs seized at the time of the execution of the search warrants, there are only thirty-six discs the subject of the charges which have been laid. In my opinion I should fix the penalty having regard to the fact that only thirty-six discs are the subject of the charges. However, the Court is directed by s 16A of the Crimes Act 1914 (Cth) to take into account, where an offence forms part of a course of conduct consisting of a series of criminal acts of the same or similar character, that course of conduct. In the present case I take into account the course of conduct involved in running The Laser Disc Shop, and I treat the three offences charged as pertaining to different aspects of that same course of conduct. 16 In my opinion I should fix a monetary penalty having regard to the seriousness of the course of conduct, and having done so, then divide it between the three offences. I take into account the nature and the circumstances of the offence which I have outlined. I take into account the personal circumstances of the defendant, as I have outlined them, but it is not suggested that he is not in a financial position to meet a moderate monetary penalty. 17 I have adverted to the nature of the loss likely to be suffered by the potential victims in the offence. It is put to me that they in fact suffered very little loss because the offending goods were seized. That is so in relation to the goods that were seized but the course of conduct itself carried with it the potential for loss and that must be reflected in a penalty. 18 The question of deterrence arises. Insofar as there may be a need to impose, in some instances, a penalty that carries a deterrent to the defendant himself, I think that need is of a low order here. As I have already indicated the defendant has been put out of the relevant business and there is no likelihood of him taking it up again. However, there is also the question of general deterrence. It is important in these types of offences, which are not always easy to detect and that have the potential to interfere with important rights in the community, that the penalty fixed be sufficient to deter others that might be minded to engage in similar conduct. That is a matter which I must take into account here. 19 There is a statutory formula relevant to the question of penalty. In the case of offences prosecuted in the Federal Court concerning cinematographic films, if the person is a natural person s 133(1)(d) (as it stood at the time of the offences) required a fine not exceeding $1,500 for each article, or imprisonment for a period not exceeding five years, or both, and in the case of a prosecution in the Federal Court the maximum monetary fine for a natural person should not exceed $50,000. The penalties have since been increased. In terms of the deterrent effect which penalties may have for this type of offence, it should also be noted that where the defendant is a body corporate the monetary penalty is five times greater than it would be for a natural person. 20 Applying the $1,500 per article provision in this case, on the offence under s 132(1)(b) the maximum penalty would be $1,500. On the offence under s 132(2A)(a) the maximum would be $31,500, and on the offence under s 132(1)(d)(i) the maximum would be $21,000. Whilst offences of this kind must be treated as serious, I consider that the defendant's offending should be treated as falling at the lower end of the scale. I take that view because these are first offences; the defendant has previously been a person of good character; this is a case of parallel importing, not a case of piracy or illegal copying; and the importing was done under a foolhardy, but mistaken view that the conduct was not illegal. 21 In all the circumstances I think there should be an overall fine of $4,500 in addition to which there will be an order that the costs of the prosecution be paid by the defendant. It is necessary to divide the penalty between the three offences. I could divide it equally between the three; that would be $1,500 on each charge, but I do not do so as it would be inappropriate to impose the maximum fine on the offence under s 132(1)(b). On SG 121 of 1998 which charges the sale of one article, there will be a fine of $750. On SG 120 of 1998, which charges the possession of twenty-one articles, there will be a fine of $2,000, plus an order that the defendant pay the prosecutor's costs fixed at $400. On SG 122 of 1998, which charges the importation of fourteen articles, there will be a fine of $1,750. The fines and costs shall be paid within three calendar months. 22 I order that the two laser video discs purchased on 23 October 1995, and those seized under search warrants on 26 and 27 October 1995 be delivered up to the copyright owners or their authorised agent in Australia. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice von Doussa.