It appears that 2010 is shaping up to be a very important year for Australian copyright law1 with the Federal Court of Australia delivering another landmark decision in Telstra Corporation Limited v Phone Directories Company Pty Ltd  FCA 44. In this case the Court held that copyright does not subsist in Yellow Pages and White Pages telephone directories.
Justice Gordon followed the High Court's decision in IceTV2 and found that copyright could not subsist because the author of each of the directories had not been (and could not be) identified. In particular, the directories were created through a computer automated system which did not allow any independent intellectual contributions from human contributors.
This decision is a significant departure from the Full Federal Court's 2002 decision in Desktop Marketing3 where it held that copyright subsisted in Telstra's directories and that the copyright had been infringed. It also clearly indicates that the process started by IceTV of bringing Australian law on copyright protection of databases into line with the United States' and the European Union's position, is continuing.
Telstra and its wholly owned directories and advertising arm Sensis publish their White Pages and the Yellow Pages directories (Directories) throughout many regions in each of the States and Territories of Australia.
The directory business is big business in Australia. In the 2006 financial year, the Directories generated more than 80% of Sensis' profits, which translates into revenue of more than $1 billion for the Yellow Pages and $300 million for the White Pages. In 2007, Telstra and Sensis (collectively the Applicants) commenced proceedings against a competitor, Phone Directories Company. They alleged, among other things, that copyright in each of the Directories had been infringed. The Court hived off the issue of subsistence of copyright in the Directories to be determined first.
The Applicants adduced a mammoth 91 affidavits from witnesses in support of their claim that copyright subsisted in the Directories. While the Applicants submitted that they were not required to identify a particular 'author' in order to prove subsistence, they said that if this was required then these 91 individuals were the authors.
This evidence revealed that the production of a White Pages or Yellow Pages directory was mostly automated and involved the following steps:
- Customer information is obtained from a number of sources to compile listing information. Such sources can include data from other telecommunications carriers, the previous year's directory and direct contact from customers.
- From 2003, this information has been listed in a computer system known as Genesis. In many cases this occurs automatically, in other cases it occurs manually.
- As the listing information is entered into a database automatic checks are conducted by Genesis to ensure that the information is complete, accurate and in a form that complies with rules that were developed by the Applicants (Rules). These Rules govern the content and presentation of listings.
- The White Pages and Yellow Pages are produced on a rolling schedule throughout the year. The production of a new directory is based on the previous year's directory. Indeed, a significant amount of the data is rolled-over into the new directory. This roll-over process is automated.
- Prior to publication of a particular directory further checks are conducted by Genesis using electronic searches and any corrections required are made manually.
- In order to produce the directory, the listing information for the specific directory is extracted from Genesis and presented in accordance with the Rules. The other aspects of the directory such as headings and pictures are then added and arranged on pages which are typeset and paginated.
- The completed directory is printed and distributed.
The Copyright Act 1968 (Cth) (Act) provides for copyright protection if a work is an original literary work of which the author was a qualified person when the work was made; namely when the work was first reduced to writing or some other material form.
The Act defines literary work as including a table or compilation, expressed in words, figures or symbols and a computer program or compilation of computer programs. Some examples of what the courts have held to be literary works include arrangements of documents, anthologies, catalogues of stock and phone directories.
Here, in some geographic regions in Australia the White Pages and Yellow Pages are physically separate whereas in other regions they were co-bound. The Applicants' case was that the relevant literary works were each of the Yellow Pages and White Pages that constitute a physical directory.
The importance of authorship
This case has confirmed the centrality of authorship in determining whether copyright subsists in a work. Indeed, the Act fixes on the author(s). If an author(s) cannot be identified at all copyright cannot subsist.
The Court held that none of the 91 people identified by the Applicants were the authors of the Directories. The evidence did not cover all of the Directories (it only related to a sample). Further, many of the individuals who could be considered as joint authors had a limited role in contributing to the Directories. When they did contribute then such contributions were dictated by computer systems and the Rules. Also, many of the workers that were involved with the creation of the Directories were not Sensis employees but were contractors. The Applicants failed to identify or adduce any evidence for any of these contractors.
Even if the Applicants could have pointed to 'authors' of the Directories, those people did not exercise independent intellectual effort as the creation process was heavily automated. Human intervention in that process was limited and if it occurred it was controlled through the Rules.
Therefore, as the Applicants discovered, it can be very difficult to identify an author in a computer database. Indeed, it is difficult to imagine who such an author could be. Possibly a claim of authorship may arise where a person determines how a database will function and be expressed. The intellectual effort expended in making those determinations might go to the originality of the particular form of expression of the work and satisfy the requirements under the Act.
Originality - independent intellectual effort
All literary work must be original for copyright to subsist in them.
Pursuant to Desktop Marketing subsistence of copyright in Australia only required a low level of originality. In that case, the focus was whether there had been 'substantial labour and expense' expended in the creation of the work. Copyright was found to subsist due to Telstra's 'sweat of the brow'. However, this was at odds with a number of other jurisdictions like the EU and the US. For example in the US the requirement for originality is for there to be some creative 'spark' and the US Supreme Court has held that there was no such spark in the creation of a Yellow Pages directory.4
In IceTV, subsistence of copyright was admitted on the pleadings so the High Court could not rule on it. However, it did sound an ominous warning bell for Desktop Marketing by saying '...it may be that the reasoning in Desktop Marketing ... is out of line with the understanding of copyright law over many years'. French CJ, Crennan and Kiefel JJ said that the 'requirements of the Act is only that the work originates with an author or joint authors from some independent intellectual effort'. Therefore, the focus is not on labour or expense but on intellectual effort.
The notion of originality is closely tied to authorship. It requires that works originate with an author and that the creation of the work involves some 'independent intellectual effort' or 'sufficient effort of a literary nature'. What this effort is will vary by case to case. For example, where the expression of the work is dictated by the nature of the information to be expressed (such as a schedule of television titles and time of showing or a list of names, addresses and telephone numbers) then this will go against the finding of originality.
Here, the Court held that the Applicants' system of producing the Directories is designed to limit originality, not provide for it. Where the system could be automated, it was. Where it could not, the Sensis workers were required to act consistently with the Rules. Therefore, they did not exercise either 'independent intellectual effort' or 'sufficient effort of a literary nature' and the Directories did not meet the required standard of originality.
Implications of this decision
The Applicants appear to have little commercial choice but to appeal this decision to the Full Federal Court of Australia
Given the importance of the Directories to Telstra and Sensis' revenue, it is likely that they will appeal this decision. If this dispute then makes its way to the High Court then that Court will have an opportunity to settle the law on subsistence and ownership of copyright.
Copyright owners may need to re-think their IP strategy
Database owners must be prepared that competitors may misappropriate the data they have collected. This means that they will either need to accept that others will have access to their data (and develop their business accordingly) or try and protect that information through other means, such as through an action for breach of confidence (which will only have limited applicability).
Doors will continue to open for new market entrants
In IceTV the High Court opened the door for innovators and newcomers to enter markets they had previously been locked out of, and develop data for new uses. This will continue with zest in light of this decision. This is good news for new market entrants.
Australian law looks set to become more congruous with US and EU law
Until IceTV, it seemed settled law that in Australia copyright could subsist in purely information works like databases. This was out of line with the EU's Database Directive, where databases are protected by copyright only by reason of 'selection or arrangement of their contents'.5 It was also diametrically opposed to US law.
The Australian Parliament may move to legislate to protect database owners
Legislation is likely to follow if the Applicants are ultimately unsuccessful in this litigation. Then we expect that they and interested copyright owners will lobby the Government for legislation similar to the sui generis right granted under the EU's Database Directive. Indeed, in this judgment, Justice Gordon encourages the legislature to consider this 'without delay'.
1 On 4 February 2010, the Federal Court delivered its judgment in Roadshow Films Pty Ltd v iiNet Limited  FCA 24 which was a test case about whether an internet service provider had authorised copyright infringement (see our report at http://www.dlaphillipsfox.com/article/725/ISPs-put-to-the-test---the-iiNet-case). Also on 4 February 2010, the Federal Court pronounced its judgment in Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited  FCA 29, where the Court held that pop group Men At Work's hit 'Down Under' infringed copyright in 'Kookaburra sits in the old gumtree'.
2 IceTV Pty Limited v Nine Network Australia Pty Limited  HCA 14. See our update on this case at http://www.dlaphillipsfox.com/content/upload/files/IP&T_Update_DPF1612_April_2009_(L).pdf.
3 Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd  FCAFC 112.
4 See Feist Publications v Rural Telephone Service Co 499 US 340 (Feist). In Bellsouth Advertising & Publishing Corporation v Donnellery Information Publishing Inc 999 F.2d 1436 (1993) the Federal Court held that copyright did not subsist in Yellow Pages directories.
5 See Article 3(1) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (Database Directive). Note that pursuant to Article 7.1 of the Database Directive a sui generis right is also created for databases where there has been "qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents..." of the database.
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