TVBO Production Limited v Australia Sky Net Pty Limited

AND: AUSTRALIA SKY NET PTY LIMITED (ACN 009 283 879)

REASONS FOR JUDGMENT 1 These proceedings were commenced on 23 May 2007 by the first and second applicants against the first three respondents only. At that time, the applicants alleged, amongst other things, that those respondents had infringed the first applicant's copyright in the 42 episode television drama series entitled "Twin of Brothers". 2 In the initial Statement of Claim, the applicants claimed declarations, injunctions, delivery up of infringing copies, damages and additional damages pursuant to s 115(4) of the Copyright Act 1968 (Cth) (the Act). 3 In that pleading, the applicants also claimed relief pursuant to ss 52, 53(g) and 82 of the Trade Practices Act 1974 (Cth) (the Trade Practices Act). 4 Twin of Brothers is set at the end of the Sui Dynasty and is about two ordinary men who learn martial arts skills and gain access to a secret treasure. At the same time, they inadvertently learn the "immortality routine". The brothers become the most wanted people in the martial arts world and must rely on the help of a nun and the Tong Dynasty princess to survive. 5 On 27 March 2008, by their Amended Statement of Claim, the first and second applicants joined the fourth respondent (CSC), a Taiwanese company, as an additional respondent in the proceedings. At the same time, they added causes of action for infringement of copyright and the authorisation of infringement of copyright in a second television drama series entitled "Once Upon a Time in Shanghai". The causes of action based upon the Trade Practices Act which had been pleaded in the first version of the Statement of Claim were abandoned when the Amended Statement of Claim was filed and served. 6 On 17 July 2008, a Notice of Appearance was filed on behalf of CSC by the firm of solicitors who were then acting for all of the other respondents, namely, S Moran & Co. Subsequently, on 30 July 2008, a Defence to the Amended Statement of Claim was filed by all four respondents. This document was entitled Consolidated Defence to Amended Statement of Claim by the First to Fourth Respondents. 7 A Further Amended Statement of Claim was filed on 27 November 2008 pursuant to leave granted by me. In that pleading, the third applicant was added as an applicant party. Additional matters were pleaded at that time. Those matters concerned the relationships amongst the applicants. No new allegations which could be said to have altered the substance of the applicants' case were made in this pleading. 8 Before the Further Amended Statement of Claim was filed, a Notice of Ceasing to Act was filed on behalf of the second and fourth respondents. This document was filed on 8 October 2008. 9 On 26 November 2008, I made orders for service of the Further Amended Statement of Claim on the second and fourth respondents in Taiwan. Service was subsequently effected in accordance with the orders which I made on that occasion. I also ordered on 26 November 2008 that the respondents file and serve their Defences to the Further Amended Statement of Claim by 7 December 2008. In addition, I made directions on that occasion designed to bring to the attention of the second and fourth respondents in Taiwan the fact that the applicants had amended their Statement of Claim and the substance of the orders which I made on 26 November 2008. Included within those orders was an order confirming that all questions of liability were fixed for final hearing before me on 9 February 2009. 10 The first and third respondents filed a Defence to the Further Amended Statement of Claim on 10 December 2008. The second and fourth respondents took no further part in the proceedings after 8 October 2008. For this reason, the Consolidated Defence filed on 30 July 2008 must stand as the Defence of the second and fourth respondents for present purposes. 11 When the proceedings were called on for hearing on 9 February 2009, there was no appearance either by or on behalf of either the second respondent or the fourth respondent. 12 On 10 February 2009 (Day Two of the hearing) I accepted certain undertakings given to the Court by the first and third respondents and made certain orders in respect of the claims made by the applicants against the first and third respondents. Those orders were made as a result of and in conformity with Terms of Settlement agreed between the applicants, on the one hand, and the first and third respondents, on the other hand. It is anticipated that the proceedings as between those parties will shortly be disposed of on a final basis in accordance with those Terms of Settlement. 13 On 10 February 2009, the applicants pressed their case against the second and fourth respondents in the absence of those two respondents. These Reasons for Judgment determine the case on liability and for non-monetary relief which the applicants ultimately pressed against the second and fourth respondents. In the end, that case was confined to the infringement of copyright case in respect of Twin of Brothers, the applicants having decided by the second day of the trial to abandon their case against the second and fourth respondents in respect of the series entitled Once Upon a Time in Shanghai. 14 As I have already mentioned, the applicants proceeded against the second and fourth respondents in their absence. They claimed declaratory and injunctive relief against them. As the hearing in February 2009 was always intended to deal only with the question of liability, the applicants wished to reserve their position in respect of monetary relief (damages or account of profits). 15 For the applicants to succeed, they must prove their case on the balance of probabilities in the usual way. Of course, they are relieved of the burden of dealing with any evidence tendered on behalf of the second and fourth respondents since no evidence was tendered on behalf of those respondents. 16 I am satisfied that, at all times from late March 2008, the second and fourth respondents were aware of the allegations contained in the Amended Statement of Claim. They had filed a Defence to it. 17 I am also satisfied that, in all probability, those respondents became aware of: (a) The allegations made in the Further Amended Statement of Claim filed on 27 November 2008; and (b) The fact that all questions of liability were fixed for final hearing before me on 9 February 2009. 18 Pursuant to O 32 r 2(1)(d) of the Federal Court Rules, if, when a proceeding is called on for trial, any party is absent, the Court may proceed with the trial generally or so far as concerns any claim for relief in the proceeding. 19 I have dealt with the case against the second and fourth respondents pursuant to that provision in the Federal Court Rules.

The Applicants and the Allegations Made by Them 20 The applicants are wholly owned subsidiaries of Television Broadcasts Limited (TVB) which is the world's largest producer and distributor of Chinese language programs. Its major business activities are television broadcasting, program licensing, video broadcasting and satellite broadcasting. 21 The first applicant (TVBO) was incorporated on 26 June 2002 for the purpose of owning film and television rights and in order to undertake the licensing of such rights. It is the owner of the copyright in each episode of the Twin of Brothers series for the whole world except the territory of Hong Kong. TVB is the owner of the copyright in Twin of Brothers in the territory of Hong Kong. 22 The applicants allege that: (a) TVBO and its associated company, TVB, made the Twin of Brothers series pursuant to a Co-Production Agreement between TVB and TVBO dated 8 January 2003; (b) Each of the 42 episodes of Twin of Brothers was made in Hong Kong in 2003 and 2004; (c) Hong Kong is a member of the World Trade Organisation and has been a member of that organisation since 1 January 1995; (d) China (including Hong Kong) is a signatory to the International Convention for the Protection of Literary and Artistic Works concluded at Berne on 9 September 1886 (the Berne Convention); (e) Pursuant to s 184 of the Act and reg 4(1) of the Copyright (International Protection) Regulations 1969 (Cth), copyright subsists in each episode of Twin of Brothers; (f) Each episode of Twin of Brothers comprises a cinematograph film in which copyright subsists; (g) It was a term of the Twin of Brothers Co-Production Agreement that TVB would own the copyright in cinematograph films made pursuant to that Agreement for the territory of Hong Kong and that TVBO would own the copyright in cinematograph films made pursuant to that Agreement for the rest of the world (including Australia); (h) Each episode of Twin of Brothers is a cinematograph film made by TVB and TVBO pursuant to the Twin of Brothers Co-Production Agreement; (i) Accordingly, TVBO is the owner of copyright in Australia in respect of each of the cinematograph films corresponding to each episode of Twin of Brothers; (j) By Licence Agreement dated 23 July 2003 between TVBO and the second applicant (TVBI), TVBO granted to TVBI the exclusive licence in all territories outside Hong Kong (including Australia) to do any act comprised in the copyright in the cinematograph films of the Twin of Brothers series with the exception of video rental rights, exploitation on the internet and merchandising rights; (k) By Licence Agreement dated 22 June 2006, TVBI and TVB Video (UK) Limited (TVBUK), TVBI granted to TVBUK the exclusive licence in certain territories outside Hong Kong specified in that Agreement (including Australia) to do any act comprised in the cinematograph films of the Twin of Brothers series with the exception of video rental rights, exploitation on the internet and merchandising rights; (l) By Licence Agreement commencing on 1 January 2006 between TVBUK and the third applicant (TVB Australia), TVBUK granted to TVB Australia the exclusive rights in Australia to do any act comprised in the copyright in the cinematograph films of the Twin of Brothers series for broadcast on DTH Satellite; and (m) By reason of the transactions effected by the Agreements referred to above: A. TVB Australia (the third applicant); or alternatively B. TVBI (the second applicant) is the exclusive licensee in Australia of: (i) The right to communicate to the public (except by the internet) the Twin of Brothers series; and (ii) The right to authorise, including by way of sub-licence, the right to communicate the Twin of Brothers series to the public (except by the internet). 23 In the Consolidated Defence, the second and fourth respondents admit that each episode of the series Twin of Brothers is a separate cinematograph film within the meaning of s 10(1) of the Act. Most of the remaining allegations referred to in [22] above were put in issue by the second and fourth respondents by way of non-admission. The allegations referred to in sub-pars (k), (l) and (m) of [22] above were not addressed by the second and fourth respondents in any pleading. The first time that those allegations were made was in the Further Amended Statement of Claim filed on 27 November 2008. 24 The applicants go on to allege that, from at least 28 January 2007, CSC has, in Australia, without the licence of the applicants, communicated the whole or a substantial part of each episode of the Twin of Brothers series and thus infringed the applicants' copyright in each episode of that series. They also allege that CSC authorised the first respondent's infringement of the copyright in each of the cinematograph films comprising the Twin of Brothers series or participated in a common design with the first respondent whereby TVBO's copyright in each of those films was infringed. 25 The second respondent is said to have directed and procured and authorised the first respondent's and CSC's infringement of the applicants' copyright in the Twin of Brothers series and also to have participated in a common design with the first respondent, the third respondent and CSC to infringe TVBO's copyright in each film comprising the Twin of Brothers series. 26 Additional damages pursuant to s 115(4) of the Act are claimed.

Copyright in "Twin of Brothers" 27 Section 184 of the Act provides that the Regulations made under the Act may make provision applying any of the provisions of the Act (other than those of Pt XIA) specified in the Regulations, in relation to a country (other than Australia) so specified, in a number of different ways set out in that section. Regulation 4(1) of the Copyright (International Protection) Regulations 1969 provides that a provision of the Act that applies in relation to (amongst other things) cinematograph film made or first published in Australia applies in relation to such film made or first published in a Berne Convention country or in a WTO country: (a) In the same way as the provision applies, under the Act, in relation to an Australian work or subject-matter; and

(b) As if the foreign work or subject matter were made or first published in Australia. 28 China is a Berne Convention country and a WTO country within the meaning of that Regulation. 29 Section 90(2) of the Act provides that copyright subsists in a cinematograph film if the film was made in Australia. By reason of reg 4(1) of the Copyright (International Protection) Regulations 1969, s 90(2) applies to a cinematograph film made or first published in Hong Kong as if it had been made or first published in Australia. Thus, copyright under the Act will subsist in any cinematograph film made in Hong Kong and protection will be afforded to such film under the Act. 30 The evidence demonstrates that the Twin of Brothers series was made in Hong Kong in the period from July 2003 to August 2004. Copyright therefore subsists in each episode of the Twin of Brothers series. 31 Under s 98 of the Act, the owner of copyright in a cinematograph film is the maker of that film. Section 22(4)(b) of the Act provides that: (b) the maker of the cinematograph film is the person by whom the arrangements necessary for the making of the film were undertaken. 32 The Co-Production Agreement between TVB and TVBO dated 8 January 2003 was tendered in evidence before me. The applicants also proved that 12 episodes of Twin of Brothers were delivered by TVB to TVBO during the period between 1 January 2004 and 30 June 2004 and that a further 30 episodes of that series were delivered by TVB to TVBO in the period between 1 July 2004 and 31 December 2004. 33 Clauses 1 and 4 of the Co-Production Agreement provide that: (a) TVB owns the copyright for Hong Kong in each episode comprising the Twin of Brothers series; (b) TVBO owns the copyright in that series for the rest of the world (including Australia). 34 The applicants also tendered two VCD box sets of the title Twin of Brothers, one for sale in Hong Kong and one for sale in Macau. The box set for sale in Hong Kong bore the following statement on its packaging: © Television Broadcasts Limited & TVBO Production Limited (Release in 2004) 35 That tender was made for the purpose of placing the applicants in a position to rely upon the presumptions contained in s 131 of the Act, should it become necessary to do so. Section 131(1) provides that a person shall be presumed to be the maker of the film where the name of a person appears on copies of a cinematograph film made available to the public in such a way as to imply that the person was the maker of that film. Subsections 131(2) and 131(3) provide that where articles or things embodying the film have been supplied commercially and, at the time of supply, the article or their container bore a label with a "©" and the year and name of a person, then it is presumed that the film was made in that year and that the person so named is the owner of the copyright in that film. These presumptions operate in favour of the applicants, unless the contrary is established. 36 I do not think that the applicants need to rely upon these presumptions. However, in the present case, the applicants are entitled to rely upon the presumptions raised by s 131 of the Act with the consequence that, unless the contrary is established, the Court will presume that TVB and TVBO are the owners of copyright in the cinematograph films which comprise the series Twin of Brothers and that those films were made in 2004. 37 The specific provisions of the Twin of Brothers Co-Production Agreement rebut the presumption that the cinematograph films were made in circumstances where s 98(3) of the Act does not apply. 38 In light of the above matters, I find that copyright subsists in each film that makes up the series Twin of Brothers and that TVBO is the owner of that copyright in Australia. 39 The only licences granted by TVBO in respect of broadcast rights in Australia are those which were granted to TVB Australia and TVBI.

Infringement by the Fourth Respondent 40 The applicants tendered certain paragraphs of an affidavit sworn by the third respondent in certain proceedings in the Supreme Court of New South Wales in order to prove several facts and matters relevant to an understanding of the way in which subscribers to the first respondent's subscription service are able to view television signals in Australia. In that affidavit, the third respondent swore that: (a) The fourth respondent retransmits 16 free-to-air programs available in Taipei (the Taipei channels) from Taiwan to the east coast of Australia using the Measat-2 satellite; (b) Each of the Taipei channels is transmitted within and/or received in Taiwan using different signals of different frequencies; (c) In retransmitting the Taipei channels, the fourth respondent encrypts 14 of the 16 signals and then uplinks all of the Taipei channels' signals from the transmitters to the Measat-2 satellite. The remaining two of the 16 signals are uplinked and transmitted without encryption; (d) The satellite transponder downlinks the signals into Australia; (e) Subscribers to the first respondent's pay television service are able to view the scrambled 14 Taipei channels using the following equipment provided by the first respondent to those subscribers: (i) A 45-65 cm KU Band dish and low noise block converter (LNB); (ii) A set top box (using the Viaccess Conditional Access System); and (iii) A smart card which is inserted into the set top box to de-encrypt the signal; (f) Subscribers to the first respondent's television subscription service (as well as members of the public) are able to view the two signals (which are not encrypted) provided they have the equipment listed at (e)(i) and (ii) above. They do not require a smart card; (g) The fourth respondent is responsible for activating and deactivating the smart cards which allow the signals to be de-encrypted. 41 The retransmission of the Taipei channels is only made possible by the fourth respondent leasing capacity on the Measat-2 satellite. Having leased such capacity, the fourth respondent then sends its signal containing the Taipei channels from its base station in Taiwan to the Measat-2 satellite. The signal is then downlinked by the satellite to the east coast of Australia. This enables subscribers of the first respondent's service located in New South Wales, Victoria and Queensland to view the channels. 42 To some extent, the arrangements between the first and fourth respondents are documented in an agreement entered into between them dated 25 January 2002. Under that agreement, the fourth respondent: (a) Is to transmit by satellite the Information Data, Sound and TV Picture Service System (DTH) that are received by the customers' antenna and digital decoder; (b) Was responsible for the supply and maintenance of audio and video contents of the system; and (c) Was responsible for the transmission and maintenance of the satellite signals.

The Role of the Second Respondent 43 In the Consolidated Defence, the second respondent admitted that, at all material times, he was a director of both the first and the fourth respondents. He also admitted that he was actively involved in the management and control of the first respondent. He is the Chairman of Directors of the fourth respondent and actively represents it in commercial negotiations. 44 The second respondent is described in material available on the fourth respondent's website as follows: Mr Chih-Lung Wang who is the pioneer in Taiwan satellite broadcasting industry founded Chinese Satellite Communication Group in 1989. After 17 years of hard work, he has successfully build [sic] four Chinese DTH platforms, C-Sky-Net, I-Sky-Net, A-Sky-Net and 146-Sky-Net. These platforms carry more than satellite TV channels for millions of overseas household [sic] to enjoy the quality TV programs from Taiwan, Hong Kong and China without boarders [sic] and time gap via our four satellites' DTH platforms. 45 The applicants submitted that I should infer that the second respondent was actively involved in the management and control of the fourth respondent and also had a substantial involvement in the management of the first respondent. On the evidence before me, and in the absence of evidence to the contrary, I am prepared to draw those inferences and do so.

The Transmission of Episode 5 of "Twin of Brothers" 46 The evidence establishes that, on 28 January 2007, the fourth respondent transmitted Episode 5 of Twin of Brothers to subscribers of the first respondent's pay television service in Australia. The transmission was made on Channel 8 of the first respondent's pay television service and was available only to subscribers of that service. It was encrypted. 47 The applicants submitted that this transmission probably occurred in the following way: Episode 5 of Twin of Brothers was originally broadcast by the Fujian Media Group on its channel SETV. That organisation is based in China. That broadcast occurred with the permission and licence of TVBO. That broadcast was received by the fourth respondent and intercepted by it. It was then retransmitted to Australia without the permission of the appropriate entities. It is clear that the retransmission by the fourth respondent of Episode 5 of Twin of Brothers on this occasion was not licensed by or on behalf of TVBO. I accept these submissions and make findings accordingly.

The Retransmission by the Fourth Respondent of Episode 5 is an Infringement of Copyright 48 Pursuant to s 86(c) of the Act, the owner of the copyright in relation to a cinematograph film has the exclusive right to communicate the film to the public. 49 Section 10 of the Act provides that, in the Act, unless the contrary intention appears, communicate means: make available online or electronically transmit (whether over a path, or a combination of paths, provided by a material substance or otherwise) a work or other subject-matter, including a performance or live performance within the meaning of this Act. In the same section, the expression to the public means: to the public within or outside Australia. 50 Section 101(1) of the Act provides that copyright in a cinematographic film is infringed by a person who: … not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright. Pursuant to s 13(1) of the Act, an act comprised in the copyright in a work or other subject matter is a reference to an act which, under the Act, the owner of the copyright has the exclusive right to do. 51 Having regard to the means deployed by the fourth respondent to transmit to Australia Episode 5 of Twin of Brothers, it seems to me that it communicated by electronic transmission that episode to the public in Australia. It caused the requisite signals to be transmitted from its base station in Taiwan to subscribers of the first respondent's pay television service within Australia. It determined the content of the communication (see s 22(6) of the Act). It was not a broadcast within the meaning of that word as defined in s 10 of the Act. 52 The fourth respondent's transmission emanated from Taiwan, but this circumstance does not absolve it from liability. The transmission was received by pay TV subscribers within Australia. The fourth respondent did not have a licence to transmit that episode to the first respondent's subscribers within Australia. I find that, unless restrained, the fourth respondent will, in all probability, repeat this conduct. 53 For these reasons, I consider that the fourth respondent infringed TVBO's copyright in Episode 5 of Twin of Brothers.

The Liability of the Second Respondent 54 Section 101(1A) of the Act is in the following terms: (1A) In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in a copyright subsisting by virtue of this Part without the licence of the owner of the copyright, the matters that must be taken into account include the following:

(a) the extent (if any) of the person's power to prevent the doing of the act concerned;

(b) the nature of any relationship existing between the person and the person who did the act concerned;

(c) whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice. 55 The concept of authorisation was discussed in Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380 at [20] (p 385) (per Branson J) and at [136]-[147] (pp 408-411) (per Kenny J). 56 After reviewing a number of authorities which, by 2006, were largely of historical significance, Kenny J approached the question of authorisation by applying the terms of s 101(1A) construed in light of the historical position. Her Honour held that it is usually not a straightforward matter for the Court to determine what degree of control can constitute a sufficient basis for a finding of authorisation (Cooper 156 FCR 380 at [142] (p 410)). Her Honour said that it will always be a question of fact and degree in each case. Even mere inactivity or indifference might be sufficient if those things are coupled with other factors. 57 There is not a great deal of evidence directed to the position of the second respondent. However, he has not appeared to defend himself against the allegations made against him. His involvement with the first and fourth respondents cannot be denied (as to which see [43]-[45] above). It is reasonable, I think, in the circumstances, for me to conclude that he played a significant role in the conduct of the fourth respondent which resulted in the unlawful transmission of Episode 5 of Twin of Brothers. He seems to be the most senior executive active in the business of the fourth respondent. In the circumstances, I am prepared to infer that the second respondent authorised the infringement by the fourth respondent which I have found. I do so bearing in mind the terms of s 101(1A) and the observations of the Full Court in Cooper 156 FCR 380. 58 It also seems to me that the second respondent participated in a common design with others whereby TVBO's copyright in the Twin of Brothers films was infringed.

Conclusion 59 For the above reasons, I am prepared to make the orders sought as against the second and fourth respondents. There will be orders accordingly. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Associate: Dated: 7 October 2009 Counsel for the Applicants: Mr JV Nicholas SC with Mr CN Bova

Solicitor for the Applicants: Marque

Counsel for the First and Third Respondents: Mr M Green

Solicitor for the First, Second and Third Respondents: S Moran & Co