Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.

Friday, October 14, 2016

'Playboy, copyright and the CJEU – a revealing decision on hyperlinking in the EU

By Kirsty Corby, Associate, and Natasha Dixon, Lawyer

Hyperlinks are integral to the functioning of the internet. Websites routinely hyperlink to content freely available elsewhere on the world wide web. But what if that content is copyright protected and has been made available online without the copyright owner's consent? What is the website owner's liability, if any, for hyperlinking to that content?

Last month, the Court of Justice of the European Union (CJEU) provided some crucial guidance for copyright and website owners in the European Union on this issue (GS Media). The CJEU determined that where a website owner knows or ought to know that a copyright owner has not authorised the publication of a work online, the website owner infringes copyright by hyperlinking to that work. Where a hyperlink is created for a profit making purpose, the website owner is presumed to know that the work has been published without the consent of the copyright owner and will infringe copyright unless he or she can rebut that presumption.

Background to the decision

In October 2011, Dutch website,, posted a hyperlink to a third party website where internet users could download nude photographs of a Dutch celebrity destined for publication in Playboy. Playboy claimed ownership of copyright in the photographs. Importantly, Playboy had not published nor authorised the publication of the photographs online.

Playboy's Dutch publisher, Sanoma Media, sought to have the photographs taken down, contacting GS Media (the owner of and the Australian website hosting the photographs and notifying them of Playboy's copyright claim. Whilst the host website complied with Sanoma Media's requests and removed the photographs, GS Media refused to remove the hyperlinks from its website, instead publishing two further hyperlinks to the photographs that were then being made available by other host websites. Sanoma Media commenced proceedings against GS Media in the Dutch courts alleging that by hyperlinking to the photographs, GS Media had infringed its copyright in the photographs by communicating the works to the public. The Dutch courts referred the matter to the CJEU for guidance.

The law in the UK and Europe prior to this decision

Prior to this decision, the liability of website owners in the European Union for hyperlinking to copyright works posted online without the right holder's consent was uncertain.

In two previous decisions (Svensson and Others v Retriever Sverige AB and BestWater Intl GmbH v Michael Mebes and Stefan Potsch), the CJEU had determined that website owners would not infringe copyright by hyperlinking to works which were freely available online if the works had been uploaded initially with the right holder's consent. The CJEU reasoned, in essence, that a website owner did not communicate the works to the public in those circumstances because the hyperlink did not make the works available to a 'new public' [ie, an audience not envisaged by the right holder when he or she authorised the initial communication to the public].

However, the CJEU did not address whether the position would be different if the works had been made available online without the right holder's consent.

The CJEU's decision in GS Media

In GS Media, the CJEU sought to resolve this question left open by its previous jurisprudence on hyperlinking. The CJEU determined that where a website owner knows or ought to know that a copyright owner has not authorised the publication of a work online, the website owner – by hyperlinking to that work – communicates the work to a new public. That is, the website owner infringes copyright by hyperlinking to a work in the knowledge that it has been uploaded online without the right holder's consent.

Importantly, the CJEU found that where a hyperlink is created for a profit making purpose, the website owner is presumed to know that the work has been published online without the consent of the right holder. As such, the website owner will infringe copyright unless he or she can rebut that presumption.

Applying this analysis, the CJEU determined (subject to verification of certain factual matters by the Dutch referring court) that GS Media had infringed Playboy's copyright in the nude photographs by posting hyperlinks to the photographs because:

  • neither Playboy nor Sanoma Media had authorised the publication of the photographs online; 
  • the hyperlinks were created for a profit making purpose therefore GS Media's knowledge that the works had been uploaded without Playboy's consent was presumed; and 
  • in any event, GS Media could not rebut this presumption of knowledge because, having received a takedown notice from Sanoma Media, it had actual knowledge that the online publication of the photographs had not been authorised by Playboy. 

GS Media had therefore communicated the copyright works to the public, an infringing act under Article 3(1) of the Information Society Directive 2001/29.

The CJEU's decision in GS Media is a pragmatic response to copyright owners' concerns about the enforcement of their intellectual property rights in an internet age.

This decision reaffirms that a website owner in the European Union is entitled to post hyperlinks to copyright content available online where that content has been uploaded with the copyright owner's consent and online access to that content is not restricted by way of a paywall or otherwise.

However, the decision overall prioritises ease of copyright enforcement for right holders over the free flow of information online. In arriving at its decision, the CJEU expressed its expectation that website owners posting hyperlinks for profit carry out 'necessary checks' to ensure that the work concerned has not been illegally published online. This may prove to be an onerous obligation for website owners given how difficult it is to ascertain the origin of online content and the fact that the content of websites can fluctuate daily. It is not clear, for example, if this decision imposes a continuous obligation on website owners to monitor the pages to which their site links to ensure that the content on that page is, and continues to be, authorised by the content holder. The level of due diligence this decision requires on the part of website owners is likely to be the subject of subsequent cases before the CJEU.

Lessons for the Australian context

There has been limited judicial consideration of this issue in Australia.

Like in the European Union, copyright owners in Australia have the exclusive right to communicate a work to the public under s31(1)(a)(iv) of the Copyright Act 1968 (Cth), which includes the right to make the work available online.

In Universal Music Australia v Cooper (2005) 150 FCR 1, Tamberlin J determined that a website containing hyperlinks which enabled users to download music files from third party websites did not communicate the copyright works to the public. It was the third party websites from which the music files were downloaded, and not the respondent Cooper's website (, that made the works available online, even though the request that triggered the download of the music files came from clicking the hyperlink on Cooper's website.

On appeal, the Full Federal Court determined that Cooper had nonetheless authorised the primary infringement of the third party websites by hyperlinking to those websites. The Full Federal Court pointed to a number of factors in making its finding of authorisation, including that Cooper had the power to prevent internet users from making copies of the music files via his website, that he had deliberately designed the website to facilitate this copying and that he did not take any reasonable steps to prevent or avoid the infringements. Tamberlin J's finding that Cooper's website did not itself communicate the works to the public was not the subject of an appeal.

Further consideration of this issue both in Australia and Europe is inevitable. Whilst the approaches taken by the European and Australian courts differ considerably, the factors the courts have taken into account are similar. Both jurisdictions have placed weight on the state of knowledge of the alleged infringers, the fact that the alleged infringers had a commercial interest in the infringement and the alleged infringers' apparent failure to take steps to prevent the infringement. This means that in either jurisdiction, copyright owners should (as always) notify website owners of any potentially infringing conduct as soon as they become aware of it, and website owners should take seriously and respond promptly to any takedown notices they receive.

Friday, September 30, 2016

ACCC launches first action under the revised Franchising Code of Conduct

By Kaelah Ford, Associate

The Australian Competition and Consumer Commission (ACCC) has commenced proceedings in the Federal Court of Australia against a franchisor for an alleged breach of the Franchising Code of Conduct (the Code). This marks the first time the ACCC has sought to exercise its enforcement powers under the Code since significant revisions to the Code took effect on 1 January 2015.

The proceedings were commenced against Morild Pty Ltd (Morild), the franchisor of the 'Pastacup' chain of restaurants in Western Australia, as well as the co-founder of Pastacup, Stuart Bernstein. The ACCC alleges that as franchisor, Morild had a mandatory obligation to disclose to prospective franchisees that Mr Bernstein had previously been a director of two Pastacup franchisors that became insolvent. The ACCC also alleges that Mr Bernstein was knowingly concerned in Morild's conduct. The ACCC is seeking declarations, injunctions, penalties, findings of fact and costs.

The ACCC has stated that ensuring compliance with the Code is an enforcement priority – meaning that understanding your rights and obligations under the Code should be a priority for all franchisors and franchisees. In this post we provide an overview of the disclosure obligations that currently have Pastacup in hot water. For a more detailed look at the entire Code, take a look at our Focus.

Thursday, September 29, 2016

Most of the Sansom review's recommendations have been accepted but is the Government really prepared to dispense the changes Sansom has prescribed?

By Sarah Matheson, Partner, and Ric Morgan, Special Counsel

In March and July 2015, the Expert Panel Review of Medicine and Medical Devices Regulation – which became known as the Sansom Review – reported its findings and recommendations to the Government. The Sansom Review was tasked with undertaking a systematic examination of how Australia regulates the sale of medicines and medical devices in this country. It offered up a raft of recommendations touching on legislative reform, who should have a say in making these decisions and how the process should work.  Now, more than 15 months later, we have the Government's response. So, does this mean we can expect a healthier regulatory scheme for medicines and medical devices?

Don't get your hopes up – it’s not clear that the Government will be taking the medicine Sansom has prescribed. While only two of the 58 recommendations have been rejected, the remaining responses from the Government cover a spectrum from  deferral to support of intent to  in principle support and also acceptance, with the overriding impression being that there will only be incremental change to the Government regulation of medicines and medical devices.

Tuesday, September 27, 2016

Productivity Commission hands Final Report on IP Arrangements to Government

By Lauren John, Associate

The Productivity Commission has met its deadline to provide its Final Report on Australia's Intellectual Property Arrangements to the Australian Government. The Final Report was handed to the Government on 23 September 2016.

The Government is required to table the report in each House of the Parliament within 25 sitting days of receipt. The Final Report will not be publically available until it has been tabled. As there are less than 25 sitting days left in the year in both Houses, we may not see the Final Report until next year.

We will keep you updated on the Productivity Commission's recommendations and what they mean for you, once the Final Report is made public. In the meantime, you can read our report on the recommendations made in the Draft Report released earlier this year, and what happened at the public hearings held before the Productivity Commission in July.

Monday, September 19, 2016

Defining the relationship (again). Are we really exclusive?

By Lauren John, Associate

If you thought your love life was complicated, wait until you try to unravel the meaning of 'exclusive licensee' in the Patents Act, which has again arisen for interpretation, this time by the Full Federal Court in Actavis Pty Ltd v Orion Corporation [2016] FCAFC 121.

It is crucial to have a firm grasp of what is meant by 'exclusive licensee' when commencing infringement proceedings as a failure to establish this relationship can be a 'deal breaker'. Whether or not you are an exclusive licensee is determinative of whether you have standing to commence infringement proceedings under s120(1) of the Patents Act, and, in seeking interlocutory injunctions, will impact the ability of a party to demonstrate that it has suffered damage in relation to balance of convenience arguments, and whether it is necessary to provide a bank guarantee in order to obtain an interlocutory injunction.

Wednesday, September 7, 2016

Biosimilar Interchangeability – The PBAC's consideration of Brenzys (etanercept)

By Sarah Matheson, Partner, and Ric Morgan, Special Counsel

We now know that the PBAC is prepared to have Brenzys, MSD's biosimilar version of etanercept, 'a-flagged' to Pfizer's as Enbrel.

It appears that the PBAC has continued with its unique position and allowed in-pharmacy substitution in the absence of evidence specifically addressing interchangeability.

The PBAC identifies six matters that it considered in deciding to 'a-flag'.  Of these, only two actually address issues beyond the assessment of whether Brenzys is safe and efficacious as a biosimilar product. 

The first of these relates to study of a "one-way switch from Enbrel to Brenzys".  As noted in our previous post,  such switching and interchangeability involve different risks.

The second is to say that:

"The drug, etanercept, is not immunogenic per se, and anti-drug antibodies are rare. Switching between brands of etanercept is unlikely to change this."

Whether this addresses the real concerns about the PBAC's approach is questionable. Because the PBAC does not refer to any studies or evidence on interchangeability, it appears that there are no studies on which it has relied.

It also suggests that the PBAC is conflating switching (on a single occasion) with interchangeability, as allowed by 'a-flagging'.

It seems that the PBAC is relying on prescriber control and patient choice to suggest that by allowing 'a-flagging' they are not really supporting full interchangeability. The PBAC states:

"…the substitution process allows for patient and prescriber choice and is not automatic. For any individual prescription, a prescriber may choose to not permit brand substitution. If substitution has been permitted by the prescriber, the patient may choose which brand they wish to receive from the pharmacist."

Thursday, September 1, 2016

A Poisonous Path for Patents?

By Richard Hamer, Partner, and Suzy Roessel, Senior Associate

A number of patents which would not be at risk in major jurisdictions have recently been invalidated in Australia. These cases involve three grounds of invalidity where Australian law departs significantly from the law of major filing countries - best method, inutility and false suggestion.

Since 2013, patent amendments which disclose new matter are not permitted in Australia, so there is limited opportunity to amend a complete specification to fix these issues in the Australian national phase, particularly in relation to adding best method disclosures.