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Thursday, April 2, 2015

Is there copyright in a signal?

By Annie Zheng, Lawyer

Not every subject matter should be presumed to be susceptible to copyright protection, even those which may have significant market value, as the recent case of Seven Network Ltd v Commissioner of Taxation [2014] FCA 1411 illustrates. There, the Federal Court determined that the signals which transmitted pictures and sounds live from the Olympic Games, as opposed to a recording of such images and sounds, do not constitute a 'cinematograph film' in which copyright subsists.


Seven contracted with, and made a series of payments to, the International Olympic Committee (the IOC), based in Switzerland, for the right to use audio-visual signals (the ITVR signal) in connection with its live television broadcasts in Australia of the 2004, 2006 and 2008 Olympic Games. The ITVR signal constituted signals which transmitted pictures and sounds from the Olympic Games from the host broadcaster, IOC, to licensees such as Seven.

The Commissioner of Taxation argued that 10 per cent of the total payment (the payment amount) made by Seven should be withheld to account for IOC's liability for withholding tax, as IOC was not an Australian resident for tax purposes. 

Seven's obligation to withhold the payment amount depended on whether the payment amount could be classified as a 'royalty' within the meaning of the double tax treaty between Australia and Switzerland. The payment amount would be considered a royalty if it was paid in consideration for the use of, or right to use, 'copyright or other like property right' under article 12(3) of the Swiss Treaty.

The key question considered by Justice Bennett was whether the ITVR signal could be characterised as a 'cinematograph film' under the Copyright Act 1968 (Cth) in which copyright subsists. If so, the payment amount would be considered a royalty.

Cinematograph film?

Under the Act, a cinematograph film is the aggregate of the visual images embodied in an article or thing, so as to be capable of being shown as a moving picture by the use of that article or thing, or capable of being embodied in another article or thing by the use of which it can be so shown.

Sounds or visual images are considered to be 'embodied' in an article or thing if they are capable, with or without the aid of another device, of being reproduced from the article or thing.

The Commissioner argued that visual and sound data packets, representing the aggregate of visual images and sounds captured by a camera, were transmitted in the ITVR signal as a data stream, so that the relevant embodiment was the data stream.

Justice Bennett did not accept this characterisation. Although visual images and sounds were produced from the ITVR Signal by transmitting the signal through a cable and converting the signal by use of a receiving device (eg a television), the actual transmission of the ITVR signal occurred in the form of raw binary data – that is, electromotive forces with no physical form. The images and sounds could not be reproduced from the ITVR signal itself. At no point during the process of transmitting the ITVR signal was any picture, image or sound stored in any permanent form in the ITVR signal. It was only with the use of a receiving device that the aggregate of visual images could be produced.

Justice Bennett considered the ITVR signal to be 'more in the nature of a fleeting use of a medium of communication' than an aggregate of sounds and visual images. Therefore, there was no embodiment of visual images or sounds in the data stream.

Relevance of a 'broadcast'

The Commissioner also argued that a cinematograph film came into existence when the visual sounds and images embodied by the ITVR signal was broadcast to the public.

First, under the Act, a 'broadcast' requires a communication to the public delivered by a broadcasting service within the meaning of the Broadcasting Services Act 1992 (Cth).While copyright attaches to the television broadcasts that were transmitted by Seven, which was the relevant broadcasting service, the transmission of the ITVR signal by the IOC is not a 'broadcast' protected by copyright for the purposes of the Copyright Act. 

In any event, the Commissioner's argument is contrary to the agreed facts between the parties as no cinematograph film is embodied in the transmission over the air or via cable to each receiver.

Key lessons

It is clear from this decision that in order for something to constitute a 'cinematograph film' under the Act, it must constitute an aggregate of sounds and visual images, be of a sufficiently permanent form so as to be capable of being shown as a moving picture, be reproducible and be embodied in an article or thing.

Where the subject matter in question is a data stream transmitting signals in raw binary form, it is only after conversion of that data by a receiving device that a cinematograph film comes into existence.

This decision raises important questions for copyright enforcement and contracts. Take an example where an unauthorised person re-transmits a live video stream from a live video streaming service (assuming that the unauthorised person does not store the data such that a cinematograph film is created – and if it is, who owns the copyright therein?!) – that person may not be held to copy a cinematograph film because there is no underlying copyrightable subject matter: no aggregate of visual images or sounds can be said to be stored within the signal transmitting the live stream at any time.

By contrast, a downloadable video file recording of exactly the same content would be considered a cinematograph film because there is an embodiment of the data in permanent and reproducible form stored in the downloaded file. The unauthorised person would infringe copyright in that cinematograph film by transmitting it to the ultimate viewer.

Rights holders must carefully investigate what exactly has been taken by an alleged infringer and how it may have been taken, as there may be valuable 'properties', like the ITVR signal, which may not protected by copyright even if they have been illicitly intercepted (although there may be other actions available, depending on the circumstances).

The Commissioner of Taxation has recently sought to appeal this decision, so it will be interesting to see whether Justice Bennett characterisation is upheld by the Full Federal Court.

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