Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited

Federal Court of Australia|2010-07-06|Before: Mr J, Mr P, Jacobson J

Introduction 1 This is the third part of proceedings which concern the copyright in an iconic Australian round, "Kookaburra sits in the old gum tree" ("Kookaburra") written and composed in 1934 by Miss Marion Sinclair. 2 In the second part of the proceedings I found that two versions of another iconic Australian work the pop song Down Under infringes the copyright in Kookaburra because the flute riff of Down Under reproduces a substantial part of Kookaburra; see Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (2010) 263 ALR 155 ("February Reasons"). 3 I also found in the February Reasons that the owner of the copyright in Kookaburra, Larrikin Music Publishing Pty Ltd ("Larrikin") is entitled to damages from the composers and the recording companies which are the owner and licensee of the copyright in the words and music of Down Under. I will refer to the composers and the recording companies as the respondents. 4 This part of the case is concerned with the determination of a separate question which is essential to the quantification of Larrikin's loss or damage arising from the misrepresentations. 5 The damages which follow from my findings on liability are not damages for copyright infringement. Rather, they are damages under the Trade Practices Act 1974 (Cth) ("the Act") for misrepresentations made by the respondents to collecting societies, the Australasian Performing Right Association ("APRA") and the Australasian Mechanical Copyright Owners Society ("AMCOS"). The misrepresentations were, first, that the performance and mechanical reproduction of Down Under does not infringe the copyright in any other work and, second, that the composers and the recording companies are entitled to all of the publisher's and writer's share of the income from Down Under. 6 The question which I have to determine was stated as a separate question under Order 29 r 2 of the Federal Court Rules. It is, the percentage interest, and any other entitlement that Larrikin may have, to APRA and AMCOS income in relation to the exploitation of Down Under.

Overview and identification of the essential issues 7 The separate question was stated as the determination of a percentage of the income because it was common ground between the parties that the loss or damage which followed from my findings was, that Larrikin was not paid an appropriate percentage of the performance and mechanical income derived from the exploitation of certain versions of Down Under. 8 The parties agree that the percentage is to be determined upon the basis of a hypothetical bargain that would have been struck between a willing licensor and a willing licensee of the copyright in Kookaburra. This approach is in accordance with the principles commonly applied in assessing damages for the infringement of the rights of the owner of an item of intellectual property. There was no dispute between the parties that this approach was to be adopted in the present case, even though the damages are to be awarded under s 82 of the Act, rather than under the Copyright Act 1968 (Cth). 9 However, there are a number of issues which separate the parties in the determination of the appropriate percentage. The first, is what are the factors which inform the hypothetical bargain and its outcome. 10 The principal factor is the musical significance of the two bars of Kookaburra which are reproduced in the flute riff of Down Under. Larrikin emphasises the musical and thematic significance of the bars of Kookaburra. By contrast, the respondents submit that the reference to Kookaburra, when considered objectively, is qualitatively and quantitatively an insignificant part of the relevant versions of Down Under. 11 The relevant versions of the song are the 1979 recording and the 1981 recording, although the emphasis in the case is upon the 1981 recording. 12 The respondents also emphasise the fact that, despite the iconic nature of both Kookaburra and Down Under, the similarity between Kookaburra and the flute riff in Down Under was not noticed publicly for more than 20 years. Indeed, as the respondents point out, the similarity was not even noticed by the principal of Larrikin, Mr Norman Lurie, until it came to his attention in 2007 after the resemblance was recognised in the ABC television program, Spicks and Specks. 13 Another factor which informs the outcome of the hypothetical bargain is a consideration of so called "comparable" arrangements that are negotiated in the music industry where a part of a copyright work is "sampled" in a later work. 14 The evidence establishes that it is common practice in the music industry for the owner of a work in which a part of an earlier copyright work is "sampled" to seek a licence from the copyright owner to reproduce or "quote" the sampled part of the copyright work. A fee, calculated as a percentage of the income from the later work is then negotiated. 15 Larrikin relies upon "comparables" in which a large percentage was paid. The respondents rely on other "comparables" where a small percentage was negotiated. The parties are at odds as to which of the samples or quotations from earlier works are truly comparable to the present case. 16 A further factor which informs the outcome of the hypothetical bargain is the time at which the bargain is taken to have been reached. Larrikin contends that the relevant time is 1982. Larrikin relies, in this regard, on my finding that, by reason of the respondents' misleading and deceptive representations, APRA and AMCOS have, since 1982, paid 100% of the income from Down Under to the respondents. 17 Larrikin accepts that the effect of the limitation period stated in s 82(2) of the Act is that damages can be claimed only for the six year period commencing on 20 May 2002. However, it submits that s 82(2) does not extinguish the cause of action so that a bargain in 1982 is a legitimate counter-factual for the assessment of loss or damage within the limitation period. 18 By contrast, the respondents submit that the relevant date for consideration of the hypothetical bargain is May 2002. This is because 20 May 2002 was the first date on which a non-statute barred act of reliance on the misrepresentations could have occurred. 19 The bargaining position of the parties in a hypothetical bargain made in 1982 would be different from that of the parties in 2002. In 1982 Kookaburra was a well known work and Miss Sinclair was well known as its composer. Men at Work and Down Under were not well known at that time. However, by 2002 the 1981 recording of Down Under had come to enjoy considerable commercial success. A factor in the negotiations would therefore be the desire of the respondents to continue to enjoy the fruits of that success by preserving the flute riff in the form in which it appears in the 1981 recording. 20 Thus, an issue arises in the proceeding as to whether the hypothetical bargain is to be considered as at 1982 or 2002. In my opinion, for reasons set out below, the correct date is 1982. However, for abundant precaution I propose to answer the question as at both of the dates for which the parties contend. 21 A further issue which arises is whether the percentage figure that is payable is to be paid on all versions of Down Under regardless of whether they contain the "offending" bars of Kookaburra. Larrikin contends that the usual practice in the music industry is for the percentage to be paid on all versions of the derivative work. The respondents submit that to order the percentage to be payable on versions of Down Under which do not reproduce the first two bars of Kookaburra would be contrary to s 82(1) of the Act. 22 This is because the reproduction of versions of the work which do not reproduce the first two bars of Kookaburra do not infringe Larrikin's copyright in Kookaburra. Accordingly, there could be no misleading representation to APRA and AMCOS in relation to the respondent's entitlement to 100% of the income from those versions of Down Under.

The relevant principles 23 The underlying question in this part of the proceeding is one of damages under s 82 of the Act. However, the separate question which I have to determine is not concerned with the quantification in dollar terms of Larrikin's loss or damage. Rather, it is concerned with the answer to a specific question based upon the application of principles gleaned by analogy from authorities which deal with infringement of patents or other species of intellectual property. 24 It is well established that claims for damages under s 82 are not to be approached by attempting to draw an analogy with a particular form of claim under the general law: Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at [44]. However, the present case does not contravene that guideline because the separate question is framed on a narrow basis. 25 The separate question assumes that the loss or damage suffered by Larrikin was the financial loss of not being paid a percentage of the performance and mechanical income derived from the exploitation of the 1979 recording and the 1981 recording, and from certain other works agreed between the parties to be governed by my findings in relation to the two nominated recordings: see Order 3(b) dated 27 October 2009. 26 What therefore underlies the separate question is the proposition that to avoid the contravention of the Act, which I found in my February Reasons, the respondents should have informed APRA and AMCOS that a percentage of the income derived from the exploitation of the 1979 recording and the 1981 recording was required to be paid to Larrikin. 27 That was the basis upon which the case proceeded. There was no dispute between the parties that the principles which informed the inquiry were those that are to be gleaned from a review of the principles applicable to an award of damages for copyright infringement stated by Pumfrey J in Ludlow Music Inc v Williams (No 2) [2002] EWHC 638 (Ch) ("Ludlow Music") at [38] - [48]. 28 The following relevant principles are to be drawn from Ludlow Music. 29 First, the respondents being wrongdoers, damages should be liberally assessed but the object is to compensate the applicant, not to punish the respondents. 30 Second, it is common practice in the music industry for the owner of the copyright in a work to grant a licence to a person who seeks to use part of the original work in a derivative work. In those instances the owner of the copyright will grant a licence in return for a share of the copyright (or a share of the income) in or from the derivative work. 31 Third, when an infringer uses the copyright work without a licence, the measure of the damages it must pay will be the sum which it would have paid by way of royalty if, instead of acting "illegally", it had acted legally. 32 Fourth, where (as in the present case) there is no "normal" rate of royalty or licence fee, evidence may be adduced of practice in the industry including expert evidence of factors which may guide the court in the determination of the applicable rate. Evidence of that type will be general and hypothetical and it will be a matter for the court to determine the weight to be given to it. 33 Fifth, where (as in the present case) some form of royalty or profit share is appropriate, the basis for the assessment is a transaction between a willing licensor and a willing licensee. The assessment has to be made upon all the relevant evidence which may include evidence of rates agreed in other similar or "comparable transactions". 34 Sixth, the process is one of judicial estimation. Mathematical precision is not attainable. It would appear that if the court is to err, it should do so on the side of generosity to an applicant.

Relevant findings on liability 35 A number of the findings which I made in my February Reasons are relevant to the present inquiry. 36 First, I dealt with three versions of Down Under, namely the 1979 recording, the 1981 recording and the Qantas advertisements. I found that the 1979 recording and the 1981 recording reproduce a substantial part of Kookaburra but that the Qantas advertisements do not: February Reasons [242]. 37 Second, the basis of the finding of liability was that the respondents made misrepresentations to APRA and AMCOS within the meaning of s 52 of the Act. Without those misrepresentations, APRA and AMCOS would not have paid 100% of the income to the respondents from 1982: February Reasons [285] and [310]. 38 Third, although the initial misrepresentations to APRA and AMCOS were made well outside the limitation period fixed by s 82(2) of the Act, the misrepresentations were "continuing representations" which could support claims for damages suffered as a result of acts of reliance within the limitation period: February Reasons [285], [292] - [297], [315] - [316]. 39 Fourth, I rejected Larrikin's claims for damages for authorisation of copyright infringement: February Reasons [318] - [322]. I also rejected a claim based on unjust enrichment: February Reasons [327] - [336]. 40 Fifth, in the February Reasons I gave a detailed description of Kookaburra and the 1981 recording of Down Under. I do not need to repeat the descriptions but Dr Ford's analysis of the component parts of the 1981 recording set out at [84] of the February Reasons is a valuable reference point. 41 Sixth, I made a number of findings about the evidence of the 1981 recording which included findings about the contributions of the producer, Mr Peter McIan, and the flautist Mr Greg Ham which are relevant to the present inquiry. 42 Seventh, in particular I found at [96] that Mr McIan rearranged and shortened Down Under to make it more suitable as a pop song. I also found that Mr McIan substituted Mr Ham's flute riff for the original bass riff introduction with a view to making the flute the lead solo instrument as he had done with the saxophone introduction in an earlier successful arrangement of Men at Work's song "Who Can It Be Now". 43 Eighth, I found at [98] that Mr Ham's aim in adding the flute riff was to inject some "Australian flavour" into the 1981 recording and that he deliberately reproduced the relevant part of Kookaburra for that purpose: February Reasons [214], [216]. 44 Ninth, my finding that the 1979 recording and the 1981 recording reproduce a substantial part of Kookaburra does not amount to a finding that the flute riff is a substantial part of Down Under or that it is the hook of that song: February Reasons [339].

Mr Lurie's evidence in chief 45 Mr Lurie expressed the opinion that having regard to his experience in conducting licence negotiations in the industry, and taking into account percentages that were agreed in other instances of sampling, a fair remuneration for the licence to use the copyright in Kookaburra for the purpose of writing and exploiting Down Under negotiated on an arm's length basis between willing parties would have been a royalty in the order of between 25% and 50% of the total income of Down Under. 46 The factors which in Mr Lurie's experience have an impact on the licence negotiations include: · The relative popularity of the copyright song as compared with the artist who will be performing the new work; · The amount or quality of the copyright song included in the new work: …that is, whether the sample is a significant and recognisable part of the new work and whether both the lyrics and the music are used in the sample; · The importance of the sample in the new work or the weight attributed to the sample in the new work; that is to say, why the sample has been selected, as for example to convey emotions or ideas. 47 Mr Lurie considered that in 1981 Kookaburra was a very well known song, instantly recognisable, not only in Australia but also in the United Kingdom and the United States of America ("USA"). He said that in contrast, in 1981, Men at Work had an "insignificant reputation" in the industry. 48 He accepted that the sample of Kookaburra comprises only the music but he said that the sample is easily recognisable, once it is pointed out. 49 Mr Lurie pointed out that the sample is repeated in the 1981 recording " a number of times" and he said that: It contributes significantly to the feel of the song. It is in itself evocative of the Australian national identity. I would have emphasised that Kookaburra is an important part of the song Down Under… 50 Importantly, Mr Lurie stated that the percentage he would have taken on behalf of Larrikin in negotiations with the EMI Companies would: …have had regard to the importance of the infringed work to Down Under as a whole and the practicalities of re-recording Down Under without recording those parts of the song which reproduced part of Kookaburra. 51 In addition Mr Lurie put forward three examples of arrangements negotiated by an entity related to Larrikin for the licence of a sample of copyright songs. The assumption underlying this evidence was that these examples are "comparable" instances of sampling which would inform the outcome of the hypothetical bargain in the present case. The examples are: · A part of the song "Tainted Love" was used by permission in Rihanna's song "SOS". Mr Lurie said that the copyright owners of "Tainted Love" received 80% of the mechanical income and 40% "of the publisher's share" of the performance income of SOS. · A part of the song "Kingston Town" was used with permission in the song "Stars are Blind" in Paris Hilton's debut album. A share of 33.34% of the mechanical income and 33.34% "of the publisher's share" of the performance income of "Stars are Blind" is said to have been negotiated. · After a dispute in relation to the unauthorised use of the song "My Sharona" which was sampled in the Rogue Traders' song "Watching You" a fee of 21.875% of the mechanical income and 21.875% "of the publisher's share" of the performance income of "Watching You" is said to have been negotiated. 52 Mr Lurie gave one further example. It was the use of two lines of the lyrics of "Waltzing Matilda" by Eric Bogle in his song "And the Band Played Waltzing Matilda." A claim of copyright infringement was apparently made and resolved by an agreement under which Mr Bogle pays 15% of the royalties from his song in return for the use of the lyrics.

Cross-Examination of Mr Lurie 53 Mr Lurie adhered to his evidence that a fair remuneration for the reproduction of two bars of Kookaburra is 25% to 50% of the total income from Down Under, notwithstanding a large number of matters which may be thought to show that the portion of Kookaburra which is reproduced is an insubstantial part of Down Under. 54 These matters include: First, no lyrics are reproduced. Second the number of bars taken from Kookaburra is 2 out of 4. Third, those bars are interspersed within the flute riff itself. That is to say, as I observed at [6] of my February Reasons: …on each occasion when the flute riff appears in Down Under, it includes other notes which were not part of Miss Sinclair's composition. 55 The fourth matter is that the flute riff itself is part of a larger song. Fifth, in the full version of Down Under the bars from Kookaburra account for about 5.8% of the total number of bars in Down Under. Sixth, in the 17 or 18 years in which Mr Lurie has been familiar with both works he did not recognise the resemblance between Kookaburra and Down Under. 56 Mr Lurie was cross-examined as to statements he made in a public radio interview that he was claiming only a "small percentage" of the income from "Down Under," and that his claim did not include any claim relating to the lyrics. He adhered to his evidence that 25% to 50% of the income was fair remuneration notwithstanding his eventual acknowledgment that this was inconsistent with his statements on the radio. 57 Mr Lurie was also cross-examined at some length about his evidence of the percentage of the performance income achieved by the entity related to Larrikin for the right to use samples of "Tainted Love", "Kingston Town" and "My Sharona". 58 His evidence in cross-examination on that topic exposed some errors in his affidavit. Moreover, he gave inconsistent answers about the effect of the Copyright Management System ("CMS") screen reports to which he referred in his affidavit in order to support his statements about the relevant percentages of the performance income. 59 Ultimately Mr Lurie's evidence in cross-examination was that Larrikin (or its related entity) obtained 40% of the whole of the performance income from "SOS", 16.667% of the whole of the performance income from "Stars are Blind" and 21.875% of the whole of the performance income from "Watching you". 60 Mr Lancaster sought to explain the inconsistencies through re-examination. Even if the effect of that evidence is that the true figures are greater than those which were elicited in cross-examination, in my view those figures have no real bearing on the outcome of the case. 61 This is because, Mr Lurie conceded in cross-examination, that the three examples which he put forward as comparables were "different examples" from the present case. Although he did not accept the proposition that the examples were not truly "comparables", in my opinion that was the effect of his evidence. 62 That conclusion is best illustrated by the following passage from Mr Gleeson's cross-examination: The next proposition I'm going to put to you, for your consideration, is that when one moves from Tainted Love to SOS the riff is used throughout the song?---Yes. And used to a much greater degree than in the Kookaburra Down Under situation?---Yes. And that is evident, and immediately recognisable by the hearer; correct?---Correct. And one could regard SOS as being an adaption of Tainted Love, couldn't you?---Yes, one could. And I want to put a third proposition to you before I play the tunes, which is, contrary to what you've told his Honour twice now, some of the lyrics of Tainted Love are, in fact, directly reproduced in SOS, aren't they?---Not a great deal of lyrics. Didn't you tell his Honour a little earlier this afternoon, twice, that there was no lyric taking in the Tainted Love SOS example?---I wasn't aware of lyrics being used. Yes. I want to suggest to you that the lyrics which are taken are these: I toss and turn, I can't sleep at night. Which are a very famous part of the Tainted Love lyric, aren't they?---They're part of the lyric. And they're taken by SOS; correct?---I'll take your word on that. Now, in those three respects I've identified, number 1, the riff is instantly and highly recognisable, number 2, it's used throughout the song and number 3, there is at least some taking of lyrics, you could not seriously suggest that this provides a relevant comparable to the present case?---It's comparable. It's a question of what percentage. Each of those three factors I put to you would suggest that the percentage in the notional Kookaburra, Down Under case would be significantly less than it would be for SOS?---I would agree; they would be less. 63 Later, Mr Gleeson put to Mr Lurie that the entire range of comparables he put before the Court "bear little resemblance to the use which Kookaburra has within Down Under". He emphasised this by suggesting they are "from a different football field". Mr Lurie conceded that they are "certainly different examples". 64 Mr Gleeson then offered Mr Lurie an opportunity to identify any other work on his list which would provide a "remotely close and reliable comparator" to the present case. He selected a work entitled "Reggae Merengue" which was sampled in "LDN". 65 Both of those songs were played in Court. The following exchange then took place: MR GLEESON: Now, I think you accept that the sample was used as the musical architecture throughout that song, don't you?‑‑‑You certainly hear it very distinctively at the beginning and at the bridges. And there's little doubt that the two are recognisable without someone having to point it out after 17 years, would you agree?‑‑‑Yes. 66 Two other examples of sampling taken from the evidence of the respondents' expert, Mr Jones, were then played for Mr Lurie. They were David Bowie's song "All the Young Dudes" which was sampled in a song by Green Day entitled "21 Guns", and a distinctive line from Queen's well known song "We will Rock You", which was sampled by the punk rocker Eminem in a piece entitled "Puke". 67 Mr Lurie agreed that the portion of David Bowie's work which was sampled by Green Day was "an absolutely central leitmotif" of "All the Young Dudes" and that it was "very closely and recognisably integrated" into Green Day's "21 Guns". 68 He also agreed that it was a central part of the character and quality of the Green Day work and that the royalty that was negotiated was 7.5% . 69 The cross-examination continued as follows: This fairly clearly is something recognisable as a sample, without needing to be told after 17 years?‑‑‑Well, I played it to my colleagues from the US and they couldn't recognise it. Yes, what about you, Mr Lurie?‑‑‑I recognise it, yes. Yes, and you would certainly say no less recognisable than Kookaburra in Down Under, if anything, as recognisable or more, I put to you?‑‑‑Yes. In terms of its centrality in the work, it's not merely in the flute riff which is used in some but not all versions of Down Under. It is the central chorus of this Green Day work, isn't it?‑‑‑It's one of the factors in the song. Yes, and when you read Mr Jones' affidavit, he pointed out some of the matters I have put to you inelegantly in the last couple of minutes, didn't he?‑‑‑Yes. 70 Portions of Queen's "We will Rock You" and Eminem's "Puke" were then played for Mr Lurie. Mr Gleeson put to Mr Lurie that the most distinctive line of Queen's song had been used to provide the rhythmic foundation of "Puke". Mr Lurie acknowledged that he could hear references to the line from Queen's song in "Puke". 71 The following exchange then took place: Could I just conclude this afternoon by asking you, of the various comparators we have discussed, one would really put Bowie/Green Day and Queen/Eminem in a fairly close ballpark to Kookaburra/Down Under. Would you agree with that?‑‑‑I would agree with - closer with Bowie and Green Day in terms of recognition as being one of the factors. Yes, and five per cent was the deal on Queen/Eminem, as far as we know?‑‑‑Yes, as far as we know. 72 Mr Lurie also acknowledged in cross-examination that during a negotiation for a licence to sample an earlier work, the copyright owner would want to have a very clear appreciation of how the copyright work is to be used in the derivative work. He also agreed that if the copyright owner forms the view that its work is unlikely to be recognised in the second work, that would be a factor tending toward a lower fee. 73 The latter concession was given somewhat grudgingly, with the answer "possibly, yes" but in my view this was a concession against Mr Lurie's case that he was bound to make. 74 Mr Lurie also conceded that the assumption he made in his affidavit evidence about the value of the inclusion of Kookaburra in Down Under was an assumption that Kookaburra would be instantly recognisable to listeners of Down Under. 75 He acknowledged that his reasoning in relation to the negotiation process considered as at 1982 was that he would ask for a high figure because Kookaburra was well known and Down Under would be trading on Kookaburra's reputation. But he conceded that a valid point for the other party to make was: Mr Lurie, no one is going to recognise Kookaburra within our song, let's talk five percent. 76 Mr Lurie also accepted that if he were negotiating in 2002, "the popularity stakes and reputation" would be reversed in favour of Men at Work. This is a concession which points to a percentage figure at the lower end of the scale. 77 The cross-examination then turned to the practicalities of re-recording Down Under so as to exclude those parts of Kookaburra which were included in the flute riff. These questions were asked upon the assumption that the negotiation took place in 2002. 78 Mr Lurie acknowledged that his opinion about the impracticality of re-recording the song in this manner was based upon the assumption that it: …would take away from the version of the song that we know has become popular and a hit 79 However, Mr Lurie went on to concede that he did not have the qualification, experience, expertise or knowledge to express views about the likely success of Down Under if the two bars from Kookaburra were excluded from the flute riff.

The evidence of Mr Jones 80 Mr Jones is the copyright manager of EMI Music Publishing Australia Pty Limited. He affirmed an affidavit which explained the process of "sampling" in the music industry and the practices followed by EMI Music when a licence is sought to sample a portion of a copyright work. 81 The affidavit also took issue with some of the samples referred to by Mr Lurie and put forward other samples which pointed to a lower percentage licence fee. In particular, he cited "All the Young Dudes"/"21 Guns" and "We Will Rock You"/"Puke". 82 The effect of his affidavit was that the reference to Kookaburra in the flute riff of Down Under would justify "a couple of percent" of the royalties. Later, he explained this as 5% or less. 83 Mr Jones agreed in cross-examination that the industry practice, in his experience, in relation to the negotiations for the use of a sample of an earlier work is that it is a "once-and-for-all negotiation" of the percentage interest that is payable. 84 He also accepted that once the percentage is agreed, it usually: … covers a percentage of income derived from all manner of income in future received from the later work … 85 Mr Jones also agreed that some licence deals are struck where the use of the earlier work is not "substantial and overwhelming" in the later work. That level of use is not a hurdle to be cleared in order for the copyright owner to receive a share of the income from the later work. 86 He also agreed that the extent of the usage in the later work is a factor but "extent" of usage includes the character of the usage of the earlier work and its context. 87 He accepted that the negotiating parties would take into account the character and status of the earlier work and the associations attached to it, as well as the desirability to those doing the sampling of the use of the earlier work. 88 Mr Jones was then cross-examined about practice in relation to the payment of a percentage where the later work is exploited in a variety of ways, some of which do not involve reproduction of the earlier work. He said that this would depend on the terms of the particular arrangements between the parties but, ordinarily, the percentage would be paid whether or not the earlier work is reproduced. 89 Mr Jones accepted the fairly obvious proposition that no two licensing or sampling negotiations are the same. Different factors bear on each commercial deal and "no two samples are ever the same." 90 He was also cross-examined about the situation of the owner of a copyright work that has been sampled and in which the later work has already achieved commercial success at the time when the negotiation takes place. Mr Jones agreed that this situation gives the copyright owner "a pretty strong hand" because the holders of the rights in the later work will: … hesitate to walk away from what they have had as a commercial success … 91 He went on to agree that he could not imagine any reason why someone would want to cease exploiting a work if the later work has been commercially successful. Mr Jones accepted that it would be "commercial nonsense" to think that a deal would not be struck in those circumstances. 92 However, this evidence was qualified in re-examination. Mr Jones explained that in answering questions relating to the situation where the later work had achieved a measure of commercial success, he did not turn his mind to the situation where the sampling occurred for close to 20 years without the original owner making any complaint. 93 Mr Jones was also cross-examined on two other "comparables". They were the use of the string melody from Nancy Sinatra's theme from the James Bond film "You only Live Twice" by Robbie Williams in his song "Millennium" and the sample from "Summer Madness" by Kool & The Gang in Digable Planets' song "Jimmi Diggin' Cats". 94 He appeared to agree that there was some parallel between Kookaburra and Down Under in that the sample in "Millennium" appears at the start, the middle and the end. However, his recollection of the similarities was based on memory, and he said he had not listened to Down Under recently. 95 He accepted that the elements sampled by "Jimmi Diggin' Cats" were not musically overwhelming and that the use was modest. 96 The agreed percentage in the case of "You Only Live Twice"/"Millennium" was 331/3 %. In "Summer Madness"/"Jimmi Diggin' Cats", it was 25%.

Further Evidence of Mr Hay 97 I gave leave to Mr Hay to file a further affidavit, some of which was admitted into evidence. He was cross-examined by Mr Lancaster on a video-link. 98 It is unnecessary to refer to the detail of the affidavit or the cross-examination. It is sufficient to say that Mr Hay made it plain that he would have vigorously resisted the payment of any, or any substantial share, of the income from Down Under to Larrikin. 99 In particular, Mr Hay did not depart from the evidence which he gave last year about the main elements of Down Under. He regards the main elements as the opening flute line which does not include the offending bars from Kookaburra, as well as the verses and the chorus which give the song its "anthemic" quality.

Mr McIan's evidence 100 As mentioned above, I referred in my February Reasons to Mr McIan's role as the producer of the 1981 recording. I referred in particular to his substitution of Mr Ham's flute riff for the original bass riff in order to follow the success of Men at Work's earlier song "Who Can It Be Now". 101 Mr Lancaster emphasised a number of other aspects of Mr McIan's evidence which I will set out. 102 First, Mr McIan said that the key elements of the 1981 recording that the public noticed were Colin Hay's immediately identifiable voice and the keyboard and flute sound which was brought to the band by Greg Ham. 103 Second, Mr McIan said that a number of "motifs" were added to or emphasised in the 1981 recording during the production process. These were: · a recurring rhythmic keyboard motif which gave the song a distinctive rhythmic identity and contributed to its commercial success; · various musical decorations including an incidental flute and drum motif, a structured instrumental solo section featuring a guitar, flute and drum kit, as well as strong vocal harmonies; and · the distinctive introduction to the song which features a drum fill melody doubled with wine (or beer) bottles and which is referenced throughout the song. 104 Third, Mr McIan said that the 1981 recording stood on its own without the motifs but the motifs added to the commercial appeal of the song and: helped to propel it forward and give it a distinctive character. 105 Fourth, Mr McIan said that the flute had a Caribbean or reggae sound which went well with the "log drum" recurring rhythmic keyboard. The reggae sound was very popular, commercially, at that time and this was why Mr McIan especially liked the addition of the flute to the 1981 recording. 106 Fifth, Mr McIan said that the sound of Men at Work was very distinctive and focussed on the sound of individual instruments such as Mr Ham's keyboard, flute and (where applicable) the saxophone, as well as the sound of Mr Hay's "unique voice". He continued: (t)hese are the elements that I wanted to draw out and make a prominent part of the Down Under recording …

Mr Ham's evidence 107 I referred above to the findings I made in my February Reasons about Mr Ham's purpose in adding the flute to the 1981 recording. 108 In his affidavit which was tendered by Larrikin, Mr Ham did not confine his remarks to the flute. He said his aim in adding the flute and keyboard was to inject some Australian flavour. 109 He also said that the flute section added rhythmically to the song and to the drum pattern introduction featuring beer bottles. 110 Mr Ham also said that it was Mr McIan's idea to include the "Aussie" flute line in the 1981 recording.

Dr Ford's evidence 111 I referred in my February Reasons in some detail to Dr Ford's evidence insofar as it addressed the issue of reproduction of the bars of Kookaburra. 112 Both parties referred in their closing addresses in this part of the case, to other aspects of Dr Ford's evidence, in particular to observations he made in his third report dated 28 September 2009. 113 Dr Ford in effect agreed to disagree with Mr Armiger as to whether the hook of the 1981 recording is the chorus or whether it is the flute riff. Rather, Dr Ford emphasised that the flute riff is the memorable, recognisable, "catchy" instrumental break. 114 He went on to make some observations about the structure of the song, the component elements of which I set out at [84] of my February Reasons. The principal observations are: · the verses and chorus of the 1981 recording are structurally very similar; · the "hook" has a similar structure to the verses; · the main point of difference in the verses and chorus is Colin Hay's voice: which excels in adding higher and yet higher layers of harmony. … Colin Hay's voice is always distinctive …; · the "basic hook", which is Dr Ford's Example C, is distinctive and unlike any part of the melody of the verse or chorus. The addition of Examples D and E make it "even catchier". 115 Dr Ford agreed with Mr McIan that the key elements of the 1981 recording include Mr Hay's "immediately identifiable" voice and the keyboard and flute sound. Dr Ford also emphasised the strong ska or reggae sound which was very popular in contemporary recordings, featured by bands such as "The Police". 116 Dr Ford also referred to the "slick" production values which Mr McIan brought to the 1981 recording. He agreed with Mr McIan that the 1981 recording stands on its own without any of the "motifs" but that they add to the commercial appeal of the song. 117 Dr Ford also mentioned another of the significant references in the 1981 recording, namely the "Arabic-Indian" clarinet line at the start of the third verse. This was introduced by Mr Ham and is described by Dr Ford as "an all-purpose musical signifier of the exotic east".

Mr Armiger's evidence 118 Mr Armiger is another witness who gave evidence last year. I referred to his evidence in my February Reasons. A number of other aspects of his evidence are relevant to this part of the case. 119 First, Mr Armiger pointed out that the separation of the notes from Kookaburra in the flute riff of Down Under from the other distinctive notes introduced by Men at Work has the effect that: (w)e do not hear those shared notes as a melody of their own but as a part of a longer melody. Because of this, most listeners would probably be unaware of the correspondence between the two fragments of melody. 120 Mr Armiger also observed that Down Under is recognisable easily, and at once, without hearing the flute riff. Dr Ford agreed with this but he made the point that if a listener is played only the instrumental "hook" and not the verse/chorus, then Down Under would be just as recognisable.

Structure of reasons 121 The overall thrust of Mr Lancaster's submissions was that Kookaburra is an essential and integrated part of the flute riff in the 1981 recording and that the flute riff is an important and significant part of that song. In his written and oral submissions, he emphasised the importance of the flute riff in the musical and thematic elements of Down Under. 122 Implicit in this is that the musical and thematic elements upon which Mr Lancaster relies would point toward a figure of 25% as the royalty to be achieved in a hypothetical bargain. 123 Mr Lancaster took what he described as a "4 pronged" approach to the significance of the flute riff. The four prongs are, the musical significance, the thematic significance, the role of Kookaburra in some of Mr Hay's public performances, and the visual associations linked with the music video to which I referred at [104] of my February Reasons. 124 I will deal with the determination of the hypothetical bargain by considering each of the elements relied upon by Mr Lancaster as well as the weight to be given to the "comparable" samples relied upon by the parties.

The date at which the bargain is to be considered 125 Larrikin's primary case was that the hypothetical bargain is to be considered as at 1982. 126 To support this proposition Larrikin relies upon the effect of s 82(2) of the Act. In particular, Larrikin points to authorities which establish that upon its proper construction, s 82(2) operates only to bar the remedy, not to extinguish the cause of action: PSL Industries Limited v Simplot Australia Pty Limited (2003) 7 VR 106 at [18] per Chernov JA; Carey-Hazell v Getz Bros & Co (Aust) Pty Limited (2001) 112 FCR 336 at [34] - [36] per French J. 127 The principle is not in doubt. But, in my view, it does not provide a complete answer to the present conundrum. That is because the finding of liability in my February Reasons was that the representations to APRA and AMCOS were continuing representations made within the limitation period. 128 This would suggest that the relevant date to determine the hypothetical bargain is 20 May 2002. However, I do not consider the question to be an easy one. The date at which the bargain is to be considered is no more than an analytical tool for determining Larrikin's loss. Thus, in my view, to consider the bargain as at 1982 is not to resurrect a statute barred cause of action. 129 Rather, it seems to me that a 1982 bargain is a legitimate counter-factual in analysing the measure of Larrikin's loss where the cause of action is based upon a representation first made in 1982 but which continued during the limitation period. 130 Nevertheless, as I said earlier, for abundant precaution I will consider the bargain as at both of the dates put forward by the parties.

Musical significance 131 The respondents accept that the musical significance of the two bars of Kookaburra as they appear in Down Under is a relevant consideration informing the question which I have to determine. 132 Some of the findings which I made in the February Reasons are relevant to, but not determinative of, the musical significance of the bars from Kookaburra in Down Under. The first is that the notes from Kookaburra play an important, indeed essential function in the flute riff of Down Under: February Reasons at [198] - [199]. 133 The second relevant finding is that the reproduction in Down Under of the two bars from Kookaburra, albeit with the separation and punctuation of the "basic hook", constitutes a reproduction of a substantial part of that work: February Reasons [221] - [229]. 134 However, as I tried to emphasise at [339] of my February Reasons, my finding that the flute riff reproduces a substantial part of Kookaburra is not a finding that the flute riff is a substantial part of Down Under. 135 The February Reasons were concerned only with the question of whether the flute riff, or certain examples of it, reproduce a substantial part of Kookaburra. This question focussed in particular upon the qualitative significance of the bars of Kookaburra that were reproduced in Down Under. It was not concerned with the musical significance, either qualitative or quantitative, of the bars from Kookaburra in Down Under considered as a whole. 136 In my view, the musical significance of the bars from Kookaburra must be considered in a balanced way, by looking at their significance in the whole of the work. That is what might be expected to emerge from the hypothetical negotiation which is the foundation of the present enquiry. 137 It seems to me that taking a balanced view, the musical significance of the relevant bars from Kookaburra is relatively small. In my opinion, it is the failure of Mr Lurie to take this approach which is the fundamental flaw in his claim for a high percentage of the income. The principal reasons I have come to this conclusion are as follows. 138 First, in considering the significance of the bars from Kookaburra in Down Under we are listening to fragments of melody. It is not easy to detect those bars as is plain from the fact that the resemblance went unnoticed, even to Mr Lurie, for some 20 years. 139 I was only able to detect the resemblance between the second and fourth bars of Dr Ford's Example E and the first and second bars of Kookaburra with the assistance of the experts, as well as that of Mr Hay: see February Reasons at [164]. Indeed, as I said at [171] of the February Reasons, there is force in the submission that I have become sensitised to the similarity between the melodies so as to be able to hear the objective similarity. 140 This is reinforced by what Dr Ford said in his evidence about hearing the melody differently in "Down Under" because: it's a bit like shining a different light on it. 141 Second, it is only Dr Ford's Example E which reproduces a substantial part of Kookaburra. Whilst I accept that the two bars of Kookaburra in that Example of the flute riff are an essential part of an integrated musical sentence, they are a relatively small part of the musical elements which give Down Under its significant musical quality overall. 142 This is borne out by the evidence of Mr McIan, as well as that of Dr Ford and Mr Hay. All of this evidence emphasises the importance of many other aspects or elements of the 1981 recording. 143 The most important other elements are, the introductory flute line, which does not include the offending bars from Kookaburra, the verses and the chorus, Mr Hay's distinctive voice and the recurring rhythmic keyboard and flute which give the song its overall reggae sound. 144 Third, I do not consider that Mr McIan's emphasis on the flute line as the lead solo instrument alters my view of the relatively small musical significance of Kookaburra in Down Under as a whole. 145 It is true that the flute line was one of the "motifs" which Mr McIan emphasised in the 1981 recording but it comprised only the second bar of Kookaburra, that is to say, Dr Ford's Example D. 146 Whilst the "catchiness" of Example D is later made "even catchier" in Example E, this is only one of the motifs to which Mr McIan referred. 147 Dr Ford accepted that the basic hook in Example C is distinctive in itself and that the addition of Examples D and E make it even catchier. But it is only Example E which reproduces a substantial part of Kookaburra. 148 That is to say, the two bars from Kookaburra which are reproduced in Dr Ford's Example E are not the sole foundation of the flute line in Down Under. They are preceded in the compositional process by the "basic book" in Example C, which owes nothing to Kookaburra, and Example D which contains only the second phrase from Kookaburra. 149 Fourth, it is plain that the lyrics, the tight structure of the verses and chorus and the "anthemic" quality of the song are critical parts of the 1981 recording. 150 That is what Mr Hay said in his evidence last year and it is reinforced by the evidence of Mr McIan and Dr Ford to which I referred above. 151 Fifth, while it is true, as Mr McIan said, that the various motifs, including the flute riff, helped to "propel" the 1981 recording forward, his evidence was that the song stands on its own without any of the motifs. 152 I accept that the 1981 recording does stand on its own, although some recognition must be given to Mr McIan's acknowledgement of the fact that the flute riff adds to the commercial appeal of the song. 153 But once it is acknowledged that the flute riff does not owe its entire existence to Kookaburra and that the similarity went unnoticed for 20 years, a balanced approach to the contribution of Kookaburra suggests that its musical significance to the whole of the 1981 recording is small. 154 My finding in the February Reasons at [198] that the two bars from Kookaburra play an important, indeed essential function in the flute riff, are to be seen in this way.

Thematic significance 155 Larrikin relies heavily on the thematic significance of Kookaburra in the 1981 recording. I referred in my February Reasons to Mr Lancaster's emphasis upon the quintessential Australian nature of Down Under. He attributed this, at least in part to Mr Ham's inclusion of the flute riff in the 1981 recording; see February Reasons at [209] - [210]. 156 Mr Lancaster returned to this aspect of the work in the present part of the case. He submits that Kookaburra carries musical connotations and references which are typically Australian and which complement and enhance the direct musical and lyrical references to Australian icons. 157 He also relies upon my finding that Mr Ham deliberately reproduced a part of Kookaburra, an iconic Australian song, for the purpose of evoking an Australian flavour in the flute riff; February Reasons at [214]. 158 So much may be accepted. But, as I suggested in my February Reasons at [213], there may be considerable tension between Larrikin's emphasis on the overall Australian flavour of Down Under and its claim for a large percentage of the work. This is because Down Under employs many Australian images apart from Kookaburra. 159 In my view, the tension is exposed in some of the evidence to which I referred in my February Reasons. The evidence includes Mr Hay's explanation of the inspiration of the verses as well as the references in the lyrics to things that may be described as typically Australian such as Vegemite, the "fried out" Kombi and beer: February Reasons at [114] - [118]. 160 The evidence also includes Mr Lancaster's cross-examination of Mr Armiger which I set out at [152] of the February Reasons. Mr Armiger accepted that there are constant references to Australia in the song but he did not accept that its Australianness comes solely from the fact that it contains the tune of Kookaburra. 161 Mr Armiger agreed that references to quintessentially Australian things appear all throughout the song and the lyrics. He apparently accepted that the inclusion of the first and second bars of Kookaburra in the second and fourth bars of Dr Ford's Example E was intended to inject Australian flavour. But this is to be read in the light of his evidence in the whole of the passage which I set out at [152] of the February Reasons. 162 There is no escape from the proposition that there are constant references to Australia throughout Down Under. Indeed, that was at the heart of Mr Lancaster's description of the song to which I referred at [210] of my February Reasons. 163 I accept that Down Under is an affectionate celebration and a witty commentary on some of the icons of Australian popular culture. But it is implicit in this, and indeed it is plain from what I have already said, that there are numerous references to other icons throughout the song. A balanced view of the contribution that the two bars of Kookaburra make to the overall theme of the 1981 recording must be seen as quite low.

Significance of Mr Hay's performances 164 Larrikin submitted that the significance of Kookaburra in Down Under is demonstrated by its role in Mr Hay's performances of Down Under. In support of this submission, Larrikin relies on the finding that I made at [111] of the February Reasons. 165 The finding was that, for a period of about two or three years from around 2002, when he performed Down Under at concerts, Mr Hay would sometimes sing the words of Kookaburra at about the middle of Down Under when he reached the flute line. 166 I relied on that evidence to support a finding of objective similarity between the flute riff in Down Under and the relevant bars of Kookaburra: see February Reasons at [161], [168] - [169]. I also relied upon it in finding that the two bars of Kookaburra that are reproduced in Dr Ford's Example E are a substantial part of Kookaburra: February Reasons at [227] - [228]. 167 However, those findings are of little or no relevance as a factor informing the outcome of the hypothetical bargain. There are three principal reasons for this. 168 First, as I have already said, the February Reasons were concerned with the question of whether the two bars of Kookaburra that are reproduced in Down Under are a substantial part of Kookaburra. The present part of the case is concerned with the question of the significance of those bars as part of Down Under, considered as a whole. 169 Second, the effect of Mr Hay's evidence, which I accept, was that he sang the words of Kookaburra as an amusing historical reference to it. Whilst the evidence supports the finding of objective similarity between the flute riff, as depicted in Example E, and Kookaburra, it does not establish that Kookaburra was significant to Down Under considered as a whole. Nor does it satisfy me that Mr Hay believed it to be a very significant part of his work. 170 Third, the most that can be said of this evidence is that it demonstrates that Example E of the flute line contained quotes from Kookaburra. It is true that these quotations were part of an integrated musical statement but the extent of the quotations as a factor in the hypothetical bargain raises wider considerations.

Visual associations: the Down Under video 171 The fourth "prong" of Larrikin's claim for a substantial percentage of the income calls in aid the video performance to which I referred at [104] - [106], [116] - [118] and [210] of the February Reasons. 172 Larrikin's submission on this issue is to the same effect as its submission on the thematic significance of Kookaburra. 173 I accept that the video shot of Mr Ham playing the flute riff, while sitting in a tree, and playing it to a koala, was a visual reference to Kookaburra. Mr Hay conceded this in his evidence last year and I referred to his concession in the passages of the February Reasons mentioned above. 174 But the submission that the video reference to Kookaburra is an important element in Down Under, and made a substantial contribution to its commercial success, must be rejected for the same reason as I rejected the submission of substantial thematic significance. 175 The reference to Kookaburra in the video clip is one of many references to Australia and Australiana. A balanced approach to it shows that its significance is very much at the low end of the scale.

Mr Ham's deliberate inclusion of Kookaburra 176 Larrikin placed considerable emphasis on my finding that Mr Ham deliberately included the bars from Kookaburra in the flute riff for the purpose of evoking an Australian flavour; see February Reasons at [214], [216]. 177 However, this was not a finding that Mr Ham deliberately appropriated the relevant bars from Kookaburra in order to capitalise upon the reputation of that work. Nor was it a finding that Mr Ham sought to use Kookaburra as the lynchpin to drive the success of the song. 178 To reiterate what I have said above, the flute line, in all its forms in Down Under was introduced deliberately to give the song an Australian flavour. But it was merely one aspect of that musical quality. What Mr Ham did by deliberately reproducing the bars from Kookaburra was to add Australian flavour to an otherwise heavily Australian-flavoured song.

Comparables 179 The evidence of "comparable" samples is to be approached with caution. Each sample is different and the factors which informed the outcome of the negotiations in the various samples referred to in the evidence are not fully available. 180 The process is quite different from that which underlies the well established principle applicable to the assessment of the value of land or items of property. There, the basis of the value is the price that a willing purchaser would pay to a willing but not anxious vendor and is determined upon the footing that there are articles of the same kind which are the subject of frequent sale and purchase: Spencer v Commonwealth (1907) 5 CLR 418 at 431, 441. 181 Nevertheless, insofar as the "comparables" adduced in evidence can be given weight as indicators of the outcome of the hypothetical bargain, they point to a low percentage figure. This is clear from the concessions made by Mr Lurie in cross-examination in the passages set out above. 182 In summary, the following pertinent points emerge from Mr Lurie's concessions. 183 First, the three samples which Mr Lurie selected, namely "Tainted Love"/"SOS", "Kingston Town"/"Stars are Blind" and "My Sharona"/"Watching You" are not comparables in particular, because they are instantly recognisable and extensively used. 184 Second, the sample which Mr Lurie ultimately selected in his cross-examination, namely "Reggae Merrengue"/"LDN" was not truly comparable for the same reason. That is, the original could be heard distinctively at the beginning and at other important parts of the derivative work. 185 Third, Mr Lurie accepted that, at least in terms of recognition as a relevant factor "All the Young Dudes"/"21 Guns" and "We will Rock You"/"Puke" are fairly close to the "ballpark" of the present case. 186 In my view the evidence establishes that recognisability of the copyright work in the derivative work is highly informative of the figure which is negotiated. So too is the extent of the use. 187 These factors suggest that a figure less than the 7.5% negotiated in relation to David Bowie's work is the appropriate comparator in the present case. 188 It may be accepted that the first two bars of Kookaburra are its central leitmotif, but it took more than 20 years to recognise them in Down Under. 189 Moreover, with one exception, all of the "comparables" were drawn from samples of songs of the same genre. Sampling in that context may be seen as adding to the commercial appeal of the derivative work. 190 The exception is Eric Bogle's song "And the Band Played Waltzing Matilda". But to the extent that any weight can be given to this example, it points toward a low figure. The rate of 15% must be discounted to reflect the use of the name in the title of the song and the instant recognisability of the lyrics. 191 The other examples to which Larrikin referred in cross-examination of Mr Jones do not assist the exercise. The concessions which Mr Jones made as to the extent of the use of "You Only Live Twice" in "Millennium" and "Summer Madness"/"Jimmi Diggin' Cats", are of little significance. The resemblance between the original and the derivative was plain in each example. I do not think anything turns on the fact that "You Only Live Twice" was the theme song from a movie rather than a pop song in its own right.

A 1982 bargain 192 The only factor which might be thought to favour a larger percentage in 1982 than in 2002 was the relative popularity of Kookaburra and the fact that Men at Work was a relatively unknown band at that time. 193 However, this is to be offset by a host of other factors which point to a low percentage. The principal factors are as follows. 194 The first factor is that the sample of Kookaburra is not an immediately recognisable part of the 1981 recording. As Mr Lurie conceded, to most listeners, the similarity can only be heard after this is pointed out to them. 195 Second, for the reasons mentioned above, a balanced view of the musical and thematic significance of Kookaburra in Down Under, considered as a whole, is at the low end of the spectrum. 196 Third, Mr Hay, as one of the interested parties, would have been most reluctant to cede any share of the income, although it is to be assumed that a "willing licensee" would have prevailed on him to pay a small figure in order to enjoy the benefits which Mr McIan saw in the flute riff. 197 Mr Gleeson submitted that in a 1982 bargain it is necessary to take into account the position of Miss Sinclair. The evidence available indicates that she had little interest in exploiting the copyright in Kookaburra for commercial gain. However, I think the better view in looking at the hypothetical bargain is to determine it on the basis of the factors I have mentioned so that a small royalty would be payable.

A 2002 bargain 198 By 2002 the reputation of Men at Work and, indeed, of the song Down Under was well established. The commercial success of the Business as Usual album demonstrates the extent of the reputation of the 1981 recording. 199 I accept that the owners of the copyright in the 1981 recording would be reluctant to walk away from the commercial success they had enjoyed to date. 200 Mr Lurie's emphasis on the difficulties of re-recording the song to remove the references to Kookaburra would have been a factor. I would give little weight to the respondents' emphasis on the possibility of exploiting other versions of the song. While it is true that Mr Lurie was not qualified to express an opinion on the likely commercial success of other "non-offending" versions, the evidence shows that it is the 1981 recording that has enjoyed the largest measure of success. 201 Nevertheless, in my opinion, other factors would have offset Mr Lurie's reliance upon the difficulty of re-recording the work. The factors to which I referred in considering a 1982 bargain seem to me to be important ones. 202 Moreover, as Mr Lurie conceded in cross-examination about the negotiation process in 1982, it was valid for the other party to say that no one was going to recognise Kookaburra in the 1981 recording so that the discussion should be about a royalty of 5%. 203 This factor was even more pronounced in 2002. No one had recognised Kookaburra, at least in any public way. It took another five years for the penny to drop on Spicks and Specks. 204 Mr Hay's opposition to payment did not decrease. Mr Lurie's sole bargaining chip was more than offset by the other factors to which I have referred.

Reputation in the USA 205 I reject the submission that Kookaburra had acquired any relevant reputation in the USA, either at 1982 or 2002. 206 The documents to which Larrikin referred in its closing submissions do not bear out the proposition for which Larrikin contends. 207 Accordingly, that was not a factor to be taken into account in a hypothetical bargain at either 1982 or 2002.

No percentage interest on other versions of Down Under 208 It is true that Mr Jones conceded that, at least in his experience, the ordinary practice in sampling arrangements is for a royalty to be paid on all versions of the derivative work, even if the earlier work is not reproduced. 209 I also accept that the usual practice in such arrangements is for the royalty to be negotiated on a once-and-for-all basis. 210 Nevertheless, in my opinion the factors to which I have pointed show that it is unlikely in the extreme that an arrangement would have been made either in 1982 or 2002 for the payment of a royalty on all versions of Down Under. 211 The real difficulty in the way of such an arrangement is that the respondents would have emphasised the difficulty in recognition of the earlier work in the 1981 recording, and the small extent of the use. Thus, this cannot be seen as an ordinary case because it seems to me that the sampling arrangements to which Mr Jones referred were instances where the derivative work sought to build on the reputation of the earlier work. 212 I need hardly repeat the vehemence of the opposition from Mr Hay to the suggestion that a royalty should be payable in the circumstances suggested by Larrikin. One can only pose the rhetorical question: Why should we pay a royalty on a non-infringing work? 213 That also provides a complete answer in the present proceeding where the claim is based upon a contravention of s 52 of the Act.

Conclusion 214 Whether the hypothetical bargain is assessed at 1982 or 2002, the percentage interest payable is at the lowest end of the spectrum. 215 Upon a proper consideration of all the relevant factors there is nothing to suggest that the owner of the copyright in Kookaburra would have had substantial bargaining power. 216 Although the quotation from Kookaburra in the 1981 recording is, in my view, sufficient to constitute an infringement of copyright, other factors are to be taken into account in assessing the percentage interest payable in a hypothetical licensing bargain. 217 The most obvious factor is the difficulty in detecting the similarity between the flute riff and the bars from Kookaburra. A further strong indicator of a low percentage is to be found in a qualitative and quantitative consideration of Kookaburra's contribution to Down Under, looked at a whole. 218 The qualitative and quantitative comparison which I am required to undertake in this part of the case is different from that which was the subject of the February Reasons. There, the enquiry was limited to the bars of Kookaburra that are reproduced in the flute riff. Here, the comparison involves a weighing of the significance of the bars of Kookaburra to the overall musical qualities of Down Under. 219 Whilst it is true that the commercial success of Down Under in 2002 may have given the copyright owner of Kookaburra an opportunity to capitalise upon its statutory monopoly, that is outweighed by the other factors to which I have referred. 220 The process of determining the percentage figure to be paid is one of judicial estimation. Taking the most generous approach that is open to me having regard to the figures put to me by the parties, I estimate the figure at 5% whether the percentage is determined in 1982 or 2002. 221 That is the figure which is to be applied in determining past damages under s 82 of the Act. Whilst each payment is referable to a separate contravention, the same percentage interest is applicable to each payment made by APRA and AMCOS during the period from 20 May 2002. 222 The 5% figure is the total percentage payable to Larrikin of the APRA/AMCOS income. 223 No claim is made under s 87 of the Act in respect of future conduct but common sense would suggest the application of the 5% figure to future payments. 224 For the reasons stated above, I consider the figures put forward by Larrikin to be excessive, overreaching and unrealistic. 225 I will hear the parties briefly on the form of the orders and on the question of costs. I certify that the preceding two hundred and twenty-five (225) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Trade Practices Act 1974(Cth)ss 52, 82

At a glance

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Before

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Judgment (25 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (5)