Case: Re Powercom Interactive Media Pty Ltd (2003) 175 FLR 1
Outcome: cited
A ringtone is a fragment of a musical work in digital form which is intended to be delivered to and to function as the ring of a mobile telephone: Re Powercom Interactive Media Pty Ltd (2003) 175 FLR 1 at 3 [9] per Lindgren P. The President found that in storing ringtones on its computers, a ringtone supplier makes a reproduction of those parts of the musical works embodied in the ringtones for the purposes of s 31(1)(a)(i) of the Copyright Act 1968 (Cth). In electronically transmitting ringtones to a mobile telephone, the ringtone supplier exercises the right of communication to the public in respect of those parts of the musical works embodied in the ringtones (s 31(1)(a)(iv) of the Act: s 10(1) contains a definition of the word 'communicate' as meaning to 'make available online or electronically transmit ... a work or other subject matter'). By providing an IVR service, a ringtone supplier authorizes the making of the copy of the ringtones which are created in the customer's mobile telephones upon electronic transmission of them (for the purposes of s 36 of the Act) (175 FLR at 4 [11]-[13]). 14 Relevantly, each of the SMS licences dated 1 January 2005 is in identical terms, except for the fees payable under Schedule 1, the identity of the licensors and an extra clause in the AMCOS version regulating reproduction of musical works (cl 5). Each SMS licence commenced on 1 October 2004 (cl 3). APRA was entitled to a fee for monophonic or polyphonic format ringtones of 1.1% (inclusive of GST) of the retail price subject to a minimum fee of 1.65cents (inclusive of GST) per sale. The fee for phonographic format (i.e. MP3) ringtones was 2.2% (inclusive of GST) of the retail price subject to a minimum fee of $3.30 per sale. At all times, Monster charged consumers, according to its advertisements $3.50 per ringtone downloaded via an SMS service. 15 AMCOS was entitled to a fixation fee of $11 in respect of each new AMCOS work added to the licensee's inventory in the quarter for which the fees were payable. In addition, the licensee had to pay AMCOS a fee for each ringtone of 11% inclusive of GST of the retail price subject to a minimum fee of 16.5cents (inclusive of GST) per sale. 149 I am of opinion that no such order should be made. Monster has committed serious breaches of the IVR and SMS licences in the past. I do not think that it is appropriate to force APRA and AMCOS into a contractual relationship in the circumstances. I am not satisfied that they would not negotiate the granting of new licences to Monster in good faith. If Monster cannot obtain in such negotiations new licences from APRA, the Copyright Tribunal has power to settle their terms. That power may also extend to the AMCOS licences in circumstances such as the present: Re Powercom Interactive Media Pty Ltd (2003) 175 FLR at 8-9 [26]-[31] per Lindgren P. 150 Monster was unlicensed from 18 August 2005 in respect of IVR services and from 13 December in respect of SMS services. It is liable to APRA and AMCOS for damages for infringement. APRA and AMCOS exercised their election to claim damages rather than an account of profits. It is agreed that the appropriate sum by which compensatory damages should be fixed is what would have been payable under the licences had Monster been licensed. That is a reasonable approach and I will adopt it. 151 Mr Mallett identified four licensees of ringtones from APRA and AMCOS which he said were comparable to the business operated by Monster. The trading names of the licensees were Jamster, Bugal, Blue Sky Frog and Powercom. He concluded that the proportions of ringtone downloads of all downloads in each of those competitors' businesses over the periods he examined were between 40.94% and 66.17%. This was based on the amount of licence fees paid to APRA and AMCOS by each of those licensees during the relevant licence periods. Mr Mallett estimated, based on his comparison with the four competitors, about 41.31% of Monster's revenue over its period of trading was attributable to ringtone services. This led to a claim that total licence fees due to 30 June 2006 were $1 million of which only about $315,000 had been paid.