Welcome to Michael Paterson & Associates

This site looks simple because you don't have a Web Standards compliant Web Browser. You can't see the site design, but all of our content is still available. Please enjoy your stay and consider upgrading your browser to view our full site design.

Can APRA Charge ISPs Licence Fees for Giving Access to Musical Works?

 

Call us on (08) 9443 5383
if you would like assistance

 

By Michael Paterson

Australasian Performing Rights Association Limited v Telstra Corporation Limited 131 ALR 141 dealt with various aspects of copyright in relation to the provision of "music on hold". The case has relevance to the provision of services by Internet Service Providers who have been asked to pay a licence fee by APRA of $1.00 per customer per year to enable the transmission of music to those customers of music that is available on the Internet that is under the control of APRA.

Section 31 Copyright Act 1968 provides, among other things, the following:

"31. (1) For the purposes of this Act, unless the contrary intention appears, copyright, in relation to a work, is the exclusive right:

(a) in the case of a literary, dramatic or musical work, to all or any of the following acts

...
(iv) to broadcast the work;
(v) to cause the work to be transmitted to subscribers of a diffusion service;
..."

Section 26 Copyright Act 1968, provides, among other things, the following:

"26. (1) A reference in this Act to the transmission of a work or other subject-matter to subscribers to a diffusion service shall be read as a reference to the transmission of the work or other subject-matter in the course of a service of distributing broadcast or other matter (whether provided by the person operating the service or by other persons) over wires, or over other paths provided by a material substance, to the premises of subscribers to the service.

(2) For the purposes of this Act, where a work or other subject-matter is so transmitted:

(a) the person operating the service shall be deemed to be the person causing the work or other subject-matter to be so transmitted; and

(b) no person other than the person operating the service shall be deemed to be causing the work or other subject-matter to be so transmitted, whether or not he provides any facilities for the transmission.

(3) For the purposes of the application of this section, a service of distributing broadcast or other matter shall be disregarded where the service is only incidental to a business of keeping or letting premises at which persons reside or sleep, and is operated as part of the amenities provided exclusively for residents or inmates of the premises or for those residents or inmates and their guests.

(4) A reference in this section to the person operating a service of distributing broadcast or other matter shall be read as a reference to the person who, in the agreements with subscribers to the service, undertakes to provide them with the service, whether he is the person who transmits the broadcast or other matter or not.

(5) Where a service of distributing matter over wires or over other paths provided
by a material substance is only incidental to, or part of, a service of transmitting telegraphic or telephonic communications, a subscriber to the last-mentioned service shall be taken, for the purposes of this section, to be a subscriber to the first-mentioned service."

In the course of the Full Federal Court appeal, Black CJ and Burchett J held that:

  1. A subscriber to a telephone service provided by Telstra is also a subscriber to the incidental service of the provision of "music on hold" - s.26(5).
  2. Telstra, as the person who undertakes to provide the deemed subscriber to the "music on hold" service with that service, is the provider of the incidental service as well as the telephone service to which it is incidental.
  3. The service, so far as it is achieved as something incidental to the telephone service by land locked wires and cables is a diffusion service - s.26(1).
  4. Telstra, as the person deemed to cause the transmission (s.26(2)(a)), infringes s.31(1)(v) is the transmission occurs without permission.
  5. Transmission of "music on hold" to a mobile telephone or other transmission where the is a break in the land locked wires and cables is not a transmission to a subscribers of a diffusion service, but is a broadcast to the public and will infringe the broadcast right if done without permission of the copyright owner (s.199(4)).

Shepherd J, however, held that there is no subscriber to the "music on hold" service and so the diffusion right is not infringed, however the broadcast right is infringed in relation to receipt by mobile telephones.

What are the implications for Internet Service Providers?

Although not spelt out with any clarity in APRA’s argument seems to be that:

  1. ISPs provide a service to their customers by which the customers can access music on the Internet.
  2. This access is claimed to be a transmission of the music in the course of a service of distributing broadcast or other matter - s.26(1).
  3. To the extent that the transmission is over wires or over other paths provided by a material substance, the transmission comes within s.26(1).
  4. The customers are subscribers to the service - s.26(1).
  5. The person operating the service is deemed to cause the music to be transmitted - s.26(2)(a).
  6. Although the ISP does not necessarily transmit the broadcast or other matter, it is claimed that because there is an agreement with the ISP giving the customers access to the service, the ISP is deemed to be person that transmits the broadcast or other matter - s.26(4).
  7. Therefore, despite the ISP having no control over the transmission of music, it is liable for all unauthorised transmissions of music via its service and APRA is entitled to shut down the ISP to prevent the infringements occurring if it refuses to pay a licence fee to APRA.

Is this Interpretation of the APRA v Telstra Case Correct?

I do not believe that the ISPs are providing a service of distributing broadcast or other matter. If they were, various anomalies arise making this interpretation inconsistent with other provisions of the Copyright Act 1968.

The musical work that is transmitted, is usually transmitted to subscribers of the telephone system. This is so because the ISPs utilise the public telephone system to facilitate their services. Following the reasoning of the majority in APRA v Telstra, it is the operator of the telephone system that distributes the music (possibly as well as the individual ISPs) and thus it is the telephone system operator that causes the transmission, because it is that operator that provides the means for distributing the matter via its telephone line infrastructure. The service of distributing music via the Internet is therefore a service that is incidental to the service of transmitting telegraphic or telephonic communications.

This means that Telstra, pursuant to the reasoning of the Full Federal Court in APRA v Telstra would also infringe the Copyright Act because it would also be operating a diffusion service.

It follows that, when the musical work is transmitted to a subscriber to the ISP, both Telstra and the ISP operate a service by which the musical work is transmitted to the subscriber. Subsection 26(2)(b), however, provides that there can be only one operator of the service that causes the transmission of the work to the subscriber.

Who is liable in light of this apparent anomaly?

I argue that neither can be liable. Nor can any of the other telephone carriers that are used in the process of transmitting the music to the subscriber, for example, if the music is available from a computer in the United States, several different telephone carriers would be used to transmit the music to the subscriber. None of the carriers is more to blame than any other. None have control over the transmission of musical works other than by ceasing to make their services available altogether as there is no effective way to screen offending material.

For this reason, it is more logical to conclude that:

  1. the operator of the service, the person that is causing the transmission of the music, is the person who makes the music available, either at that person’s place of business via music on hold, or the person posting the information on an ISP’s server computer so that it can be accessed by the world-wide public; and
  2. therefore, Telstra, other telephone system operators and the ISPs are not the persons providing a service of distributing broadcast or other matter.

Note that it is not only APRA that would seek licences if APRA is not resisted. The Copyright Agency Limited (CAL) and other copyright licensing bodies will all seek their pounds of flesh.

An analogy with distribution of goods by road then sits better with the proposed outcome because it is not the operator of the road system that causes the distribution of goods by road but the operator of the transport company that carries the goods.

Telstra and other telephone carrier companies, and also ISPs, are then not responsible for the transmission of matter that is beyond their control.

The APRA v Telstra decision is of some concern, however, because the conclusion above is in conflict with the decision of the Full Federal Court, which found Telstra, as the carrier, the provider of the service of distributing music, not the person making the music available via the telephone system.

I argue that the APRA v Telstra decision is incorrect in so far as it makes the wrong person liable for the infringements. The application to the situation with ISPs highlights the incorrectness of the decision.

It is true that there are unauthorised transmissions of musical works, but it is the person that make the works available on the Internet, not the ISPs and not the telephone carrier companies that should or can be held responsible.

If APRA litigate, their action should be vigorously defended by all ISPs who should all perhaps pay the $1.00 per customer that is being sought by APRA into a fighting fund to resist the move to force the ISPs to obtain licences from APRA.