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

Friday, November 18, 2016

A Channel Nine Exclusive! (or is it?)

By Julia Kovarsky, Associate

In the media world, getting the 'exclusive' is the ultimate goal. However, a recent decision handed down by the NSW Court of Appeal shows that exclusivity may not always be all it seems.

In 2013, WIN Corporation Pty Ltd (WIN) entered into a licence agreement with Nine Network Australia Pty Ltd (Nine) which granted WIN "the exclusive licence to broadcast on and in the licence areas covered by the WIN Stations the program schedule broadcast by Nine" on its channels. The 'licence areas covered by the WIN Stations' referred to WIN's licence from ACMA to broadcast on free-to-air television frequencies in certain parts of Australia. Six months before the WIN licence was due to expire, Nine embraced the digital age and began live-streaming its programming, including into WIN's territory. WIN brought proceedings, claiming that Nine's live-stream was a breach of their agreement – a spoiler to WIN's exclusive scoop.

The Court had to determine whether the words 'to broadcast' could encompass live-streaming. That would in turn define just how 'exclusive' was WIN's right to show Nine's programming. The primary judge, Hammerschlag J, found that WIN's exclusive right to broadcast was limited to disseminating content through free-to-air transmission and did not preclude Nine from live-streaming the same content. Having failed to get the win, WIN appealed this decision.

On appeal, the Court could not pick a single appropriate meaning for the word "broadcast". It could equally refer to free-to-air broadcasts (as argued by Nine) or online broadcasts (as argued by WIN), depending on the context. As to WIN's 'exclusivity', the Court noted that the grant of an exclusive licence in respect of some rights does not prevent the grantor exercising its other rights. Importantly, WIN conceded that the licence did not provide it with the right to live-stream Nine content, in which case it would be incongruous for Nine to be restrained from doing something which it did not grant WIN the right to do. The Court found there was no error in the primary judge's holding that the word "broadcast", as used in the agreement, referred to free-to-air transmission, particularly since the licence was confined to the areas in which WIN was licenced by ACMA to broadcast free-to-air television. Consequently, Nine's live-stream fell outside WIN's exclusive broadcast rights.

WIN's alternative argument was based on a term it claimed should be implied into the agreement, to the effect that "Nine will do all things necessary to enable WIN to have, and not do anything which would deprive WIN of, the benefit of the Program Supply Agreement and, in particular, the exclusive licence granted by the Program Supply Agreement". According to WIN, the purpose of the exclusivity granted to it was to allow it to generate advertising revenue from transmitting Nine's programs on its stations. Therefore, if Nine could live-stream those programs to the same audience with Nine's advertising, WIN was deprived of the benefit of the bargain. While it is unsurprising that commercial televisions stations want to make a profit from commercials, this argument was also dismissed by the Court. Although Nine did have an implied duty to cooperate with WIN in achieving the purpose of the contract, that purpose was limited to WIN transmitting Nine's programming through free-to-air broadcasts without competition.
Nine had no obligation to assist WIN in maximising its profit from this arrangement.

The appeal was unanimously dismissed – WIN remaining win-less.

While the case was decided on the particular terms of the contract, it does serve as a reminder that new technologies may not be covered in what would otherwise appear to be a broad agreement. Exclusive rights in existing technologies may not prevent others from encroaching on your territory in other, innovative, ways. Then, before you realise, your exclusive has been live-streamed to the world!

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