CTHHCA

Interstate Parcel Express Co Pty Ltd (t/a Angus & Robertson Bookshops) v Time-Life International

[1977] HCA 52

High Court of Australia|1977-07-01|Before: Murphy JJ, Gibbs J

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Source facts

Court

High Court of Australia

Decision date

1977-07-01

Before

Murphy JJ, Gibbs J

Source

Original judgment source is linked above.

Judgment (107 paragraphs)

[1]

High Court of Australia Barwick C.J. Gibbs, Stephen, Jacobs and Murphy JJ. Interstate Parcel Express Co Pty Ltd (t/a Angus & Robertson Bookshops) v Time-Life International (Nederlands) BV [1977] HCA 52

[2]

In this appeal I have had the advantage of reading the reasons for judgment prepared by my brother Stephen. I agree entirely with his conclusion and the reasons he expresses for it and do not desire to add anything on my own behalf.

[3]

This is an appeal from a judgment of the Supreme Court of New South Wales (Bowen C.J. in Eq.) making certain declarations and orders in favour of the first respondent, Time-Life International (Nederlands) B.V. ("Time-Life"), against the appellant, Interstate Parcel Express Co. Pty. Ltd. (carrying on business as Angus & Robertson Bookshops) in proceedings for infringement of copyright [1] . Time-Life is a company incorporated in the Netherlands and the second respondent, Time Incorporated, is incorporated in the State of New York. The appellant carries on business as a bookseller in Sydney. The proceedings were instituted by Time Incorporated and Time-Life as plaintiffs, but Time Incorporated decided not to proceed with the suit because it feared that to do so might possibly be construed as an infringement of the anti-trust legislation of the United States of America. The proceedings have since been continued by Time-Life as sole plaintiff, and Time Incorporated has been added as a defendant.

[29]

When a man has purchased an article he expects to have the control of it, and there must be some clear and explicit agreement to the contrary to justify the vendor in saying that he has not given the purchaser his license to sell the article, or to use it wherever he pleases as against himself. He cannot use it against a previous assignee of the patent, but he can use it against the person who himself is proprietor of the patent, and has the power of conferring a complete right on him by the sale of the article. The principle enunciated by Lord Hatherley L.C. is well established in patent law. However it is not always stated by saying that the sale of the patented article confers a licence to use it. In Société Anonyme des Manufactures de Glaces v. Tilghman's Patent Sand Blast Co. [5] Cotton L.J. said: When an article is sold without any restriction on the buyer, whether it is manufactured under one or the other patent, that, in my opinion, as against the vendor gives the purchaser an absolute right to deal with that which he so buys in any way he thinks fit, and of course that includes selling in any country where there is a patent in the possession of and owned by the vendor. In National Phonograph Co. of Australia Ltd. v. Menck [6] , Lord Shaw of Dunfermline, delivering the judgment of the Judicial Committee, said: In their Lordships' opinion, it is thus demonstrated by a clear course of authority, first, that it is open to a licensee, by virtue of his statutory monopoly, to make a sale sub modo, or accompanied by restrictive conditions which would not apply in the case of ordinary chattels; secondly, that the imposition of these conditions in the case of a sale is not presumed, but, on the contrary, a sale having occurred, the presumption is that the full right of ownership was meant to be vested in the purchaser These statements seem to accord more with general principles than to say that a sale of an article imports a licence to use it. The sale of an article confers on the buyer all the rights of ownership including the right to use the article, but it seems a misuse of words to say that a person who sells an article consents to its being used in any way that the buyer wishes. However the statement that a patentee who sells a patented article gives the buyer his licence to use it has often been repeated by distinguished judges. In Badische Anilin und Soda Fabrik v. Isler [7] Buckley J. said: If a patentee sells the patented article to a purchaser and the purchaser uses it, he, of course, does not infringe. But why? By reason of the fact that the law implies from the sale a licence given by the patentee to the purchaser to use that which he has bought. In the absence of condition this implied licence is a licence to use or sell or deal with the goods as the purchaser pleases And although in National Phonograph Co. of Australia Ltd. v. Menck, Lord Shaw of Dunfermline expressed his conclusion in the words I have quoted, other passages in his judgment suggest that he accepted that the consent or licence of the patentee to use the article might be implied from the sale [8] . The words of Buckley J. in Badische Anilin und Soda Fabrik v. Isler must be regarded as a correct statement of the patent law. The question is, does the same principle extend to the sale of a book the subject of copyright? 1. (1871) L.R. 6 Ch. App. 239. 2. (1871) L.R. 6 Ch. App., at p. 245. 3. (1883) 25 Ch. D. 1, at p. 9. 4. (1911) 12 C.L.R. 15, at p. 28; [1911] A.C. 336, at p. 353. 5. [1906] 1 Ch. 605, at p. 610. 6. (1911) 12 C.L.R., at pp. 24-25; [1911] A.C., at pp. 349-350.

[30]

One obvious difference in form between the Patents Act 1952 Cth, as amended, and the Copyright Act is that the former Act does not contain any provisions similar to those of ss. 37 and 38 of the latter. Mr. Handley submitted that this is not a valid point of distinction, because it is nevertheless an infringement of a patent to import and sell a patented article (Pfizer Corporation v. Ministry of Health [9] ). However there is another important difference between the law of patent and the law of copyright. By the grant of a patent in traditional form, a patentee is granted exclusive power to "make, use, exercise and vend" the invention. The sale of a patented article, by the patentee, would be quite futile, from the point of view of the buyer, if the buyer was not entitled either to use or to resell the article which he had bought. It therefore seems necessary, in order to give business efficacy to such a sale, to imply a term that the patentee consents to the use of the patented article by the buyer and those claiming under him. The law accordingly does ordinarily imply the consent of the patentee "to an undisturbed and unrestricted use" of the patented article (National Phonograph Co. of Australia Ltd. v. Menck [10] ). To make such an implication, for the purpose only of avoiding the restrictions upon the use of the article that would otherwise be imposed by the patent, seems to be perfectly consistent with the ordinary rules governing the implication of terms in contracts. However no similar necessity exists to imply a term of this kind upon the sale of a book the subject of copyright. The owner of copyright has not the exclusive right to use or sell the work in which copyright subsists: see s. 31 of the Act, and Copinger and Skone James, op. cit., par. 1027. The buyer of a book in which copyright subsists does not need the consent of the owner of the copyright to read, or speaking generally to resell, the book. The necessity to imply a term in the contract which exists when a patented article is sold does not arise on the sale of a book the subject of copyright. It was not, and could not be, suggested that the sale of a copy of a book is a licence to do the acts comprised in the copyright and set out in s. 31 of the Act.

[60]

The significance of these authorities and their irrelevance in the present case is made clear by a reading of their Lordships' advice in the National Phonograph Case [19] . Before going to that case I state my own reasons for regarding these authorities as irrelevant. They should, I think, be seen as confined to the quite special case of the sale by a patentee of patented goods and as turning upon the unique ability which the law confers upon patentees of imposing restrictions upon what use may after sale be made of those goods. If the patentee, having this ability, chooses not to exercise it and sells without imposing any such restrictions, the purchaser and any successors in title may then do as they will with the goods, for they are then in no different position from any purchaser of unpatented goods. But, to ensure that consequence despite the existence, albeit in the instance unexercised, of this power on the patentee's part, the law treats the sale without express restriction as involving the grant of a licence from the patentee authorizing such future use of the goods as the owner for the time being sees fit. The law does this because, without such a licence, any use or dealing with the goods would constitute an infringement of the patentee's monopoly in respect of the use, exercise and vending of the patent. A sale of goods manufactured under patent is thus a transaction of a unique kind because of the special nature of the monopoly accorded to a patentee; the licence, whether absolute or qualified, which arises upon such a sale is attributable to the existence and character of that monopoly. Absent that monopoly, peculiar to patents, there is no occasion for any licence. The buyer of monopoly-free goods, goods not the subject of patent rights, obtains by his purchase title to and possession of the goods and with it, of course, goes the ability, subject to the relevant laws of the jurisdiction in question, to use and deal with the goods as he sees fit. But this is only the consequence of chattel ownership and nothing in the nature of a licence is involved. The buyer of a book in which copyright exists is just such a buyer; the book, once bought by him, is not thereafter subject to any monopoly rights of the copyright owner but may be dealt with by the buyer entirely as he chooses. The copyright in the literary work of course remains with the copyright owner; the buyer has bought no part of it and remains as he was before his purchase, unable lawfully to enjoy any of those exclusive rights, reproduction, adaption or the like, which ownership of the copyright preserves exclusively for the copyright owner.

[73]

As an alternative source for the licence which the appellant must show, it relies upon the implied warranty of quiet possession said to have arisen on the sale of the books in the United States by Time Incorporated to Little, Brown & Company; no warranty arising only on the sale by Raymar Incorporated can here assist the appellant since the necessary licence must come from the copyright owner, Time Incorporated. For present purposes I assume, as did the learned primary judge, that on the sale to Little, Brown & Company the applicable law would have implied a warranty of quiet possession. Even so, it can found no licence of which the appellant can take advantage and which answers the description called for by ss. 37 and 38 of the Act. The examination of the scope of this warranty which was undertaken in Niblett Ltd. v. Confectioners' Materials Co. Ltd. [34] , in Mason v. Burningham [35] , in Microbeads A.G. v. Vinhurst Road Markings Ltd. [36] and by this Court in Healing (Sales) Pty. Ltd. v. Inglis Electrix Pty. Ltd. [37] does, I think, provide little encouragement for the view that from the existence of such a warranty there can be extracted any such a positive licence as the sections envisage; no authorities were cited which took from this warranty, one which, in the absence of contrary intent, is as matter of course to be implied into every contract for the sale of goods, what the appellant would seek to draw from it, that is, the implied grant of a licence to the purchaser to import the goods sold into any country of his choosing. But, quite apart from this, I have difficulty in appreciating how any licence arising from the implied warranty of quiet possession forming part of the contract between Time Incorporated and Little, Brown & Company can avail the appellant. It is the appellant's act of importation that must be shown to have been licensed and any implied licence in favour of Little, Brown & Company would be contractual in character, unlike those licences arising on the sale of patented articles which I have earlier discussed. The benefit of such a contractual licence would not enure to the appellant; its only connexion with the contract of which the warranty formed a part is its situation as a purchaser once removed from Little, Brown & Company and this can give it no rights under any licence said to arise out of that warranty.

[76]

This conclusion means that what the appellant saw as a means, in appropriate circumstances, of selling in Australia books published abroad at much lower prices than are presently available through overseas publishers' Australian distributors is foreclosed to it. The high cost in Australia of imported books relative to prices in their country of publication and the reasons for it are discussed by Sir Richard Eggleston in Re Books [38] . It is neither a novel nor a local phenomenon (see Re Associated Booksellers of New Zealand [39] and for the Canadian position see Lahore and Griffiths, Copyright and the Arts in Australia (1974), p. 57) and is directly related to the operation of ss. 37 and 38 of the Copyright Act and its overseas equivalents, found not only in the copyright legislation of the United Kingdom but also in that of New Zealand, Canada and South Africa. In New Zealand and Canada these provisions have given rise to litigation not dissimilar to the present. Of particular interest are the judgments in Clarke Irwin & Co. v. C. Cole & Co. Ltd. [40] and in Godfrey, MacSkimming & Bacque Ltd. v. Coles Book Stores Ltd. [41] , although in neither was the defence of licence by the copyright owner in issue, the Canadian Act, s. 17 (4), containing no reference to such licence. A European instance of the protection of rights analogous to copyright against infringement by the re-importation and sale of the "copyright" owner's own gramophone records purchased abroad is provided by Deutsche Grammophon Gmb H. v. Metro-S.B.-Grossmarkte Gmb H. & Co. K.G. [42] . There a West German Court granted an interim injunction in protection of the "copyright" owner's rights. It was only as a result of a subsequent reference to the European Court of Justice, where overriding effect was given to certain articles of the Treaty of Rome designed to ensure free movement of goods within the integrated European Common Market, that the rights of the "copyright" owner under national law were subordinated to the principles of Community law.

[103]

is far more than a mere banality. It is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behaviour of the defendant. That doctrine is rooted in the historical concept of a court of equity as a vehicle for affirmatively enforcing the requirements of conscience and good faith. where a suit in equity concerns the public interest as well as the private interests of the litigants this doctrine assumes even wider and more significant proportions. For if an equity court properly uses the maxim to withhold its assistance in such a case it not only prevents a wrongdoer from enjoying the fruits of his transgression but averts an injury to the public. The determination of when the maxim should be applied to bar this type of suit thus becomes of vital significance. (Precision Instrument Manufacturing Co. v. Automotive Maintenance Machinery Co. [45] ). The case concerned patents, a form of intellectual property similar to copyright. The Supreme Court went on to say [46] : The possession and assertion of patent rights are "issues of great moment to the public" [citations omitted]. A patent by its very nature is affected with a public interest a patent is an exception to the general rule against monopolies and to the right to access to a free and open market. The far-reaching social and economic consequences of a patent, therefore, give the public a paramount interest in seeing that patent monopolies spring from backgrounds free from fraud or other inequitable conduct and that such monopolies are kept within their legitimate scope. The facts of this case must accordingly be measured by both public and private standards of equity. (See also Blonder-Tongue Laboratories Inc. v. University of Illinois Foundation [47] ; S. & E. Contractors Inc. v. United States [48] .) Although there were circumstances of fraud in the Precision Case, the doctrine is not confined to such circumstances. 1. (1945) 324 U.S. 806, at pp. 814, 817 [89 Law. Ed. 1381, at pp. 1386-1387]. 2. (1945) 324 U.S., at pp. 815-816 [89 Law. Ed., at p. 1387]. 3. (1971) 402 U.S. 313, at pp. 343-344 [28 Law. Ed. 2d 788, at pp. 807-808. 4. (1972) 406 U.S. 1 [31 Law. Ed. 2d 658].

Interstate Parcel Express Co Pty Ltd (t/a Angus & Robertson Bookshops) v Time-Life International - [1977] HCA 52 - HCA 1977 case summary — Zoe