Facts:

 

Copyright Licensing Limited (CLL) was a not-for-profit copyright licensing body representing New Zealand authors and publishers of books, journals, newspapers and magazines,as well as overseas owners under reciprocal agreements.  Among other things, it licensed for use in student course materials the reprographic copying (by photocopying or scanning) and digital distribution of extracts from material held in hard copy format.

The respondents were the eight New Zealand universities. 

Over many years the parties had negotiated licenses under which each university paid to CLL an identical fee per equivalent fulltime student (“EFTS”) in exchange for the right to copy works for course materials.  Since 1994 the universities had appointed a team to negotiate on their behalf on a collective basis.  Both sides had always agreed that the terms of the resulting licences would apply on identical terms to all universities, and had always treated the arrangement as a “licensing scheme” for the purposes of the Copyright Act 1994 (“Act”).

In 2013, after negotiations towards a renewal of the licensing arrangement between the parties had reached an impasse, CLL filed a reference in the Copyright Tribunal under s 149(1) of the Act, seeking to have its proposed scheme declared reasonable and approved accordingly.  The reference attached a standard licence to be offered on identical terms to all respondents. 

Shortly after the filing of the reference and before discovery the universities filed an interlocutory application seeking (among other things) a declaration that what CLL proposed was not a licensing scheme for the purposes of the Act, but rather a licence or set of licences. 

 The Tribunal dismissed the universities’ application, holding that what CLL had proposed was a scheme for the purposes of the Act.  The Decision was reversed on appeal to the High Court, with Fogarty J holding that a scheme must contain more than one class of cases.

CLL appealed to the Court of Appeal.  It was supported by an intervener, Recorded Music New Zealand Limited, which licensed the public performance of Sound Recordings. 

The universities brought a cross appeal asking for a determination as to the correctness of an earlier decision of the Court of Appeal in Audio-Visual Copyright Society Limited v University of Auckland (AVCOS) [2003] 1 NZLR 417 (CA).

CLL submitted (broadly) that:

(a)        The reference was a licensing scheme. 

(b)        A scheme may license activities on standard terms to any person who wishes to take up a licence. The definition of “licensing scheme” in the Act required nothing more than that. 

(c)        It would be unworkable and costly to negotiate individual licences on potentially divergent terms where a single class of “licensable activity” comprised many prospective licensees.

The universities submitted (broadly) that:

(a)               On its true construction the definition of licensing scheme requires two or more classes. 

(b)               Fogarty J correctly decided that a scheme must normally comprise a set of criteria defining the division of licences into classes and setting out the terms of the licences to be granted in each class. 

(c)               What CLL had referred was in reality a licence, which it could have referred under s 157. 

(d)              The reference should be interpreted with the objective of mitigating the harsh economic effects of CLL’s monopoly.

 

In the cross appeal the universities categorised as dicta, and challenged as wrong, statements in AVCOS that the Tribunal has no jurisdiction under ss 149 to 150 of the Act to deal with the terms of individual licences.  CLL responded that s 149(3) conferred upon the Tribunal a wide discretion, but it could not alter the terms of individual licences within a class, since that would be inconsistent with the nature and purpose of the scheme.  If a single license fee was not reasonable for all licensees falling within a class, the Tribunal might insist upon more nuanced classes.

Prior to the appeal the parties had settled their dispute and the reference was discontinued. As a preliminary point, the universities contended that the appeal should not proceed because of mootness.   Both CLL and Recorded Music argued that the point in issue on appeal was of public importance and the appeal should proceed.

The intervener, Recorded Music New Zealand, filed evidence that it operated a number of single-class licensing schemes in New Zealand. 

Held, allowing the appeal and dismissing the cross appeal:

 

A         Appeal 

Mootness

 

(1)               Although the issue was moot so far as the reference to the Tribunal was concerned, it possessed public importance and was likely to lead again to litigation, possibly between the same parties.  Further, all submissions had been filed before the settlement was concluded, so no question arose as to the absence of a contradictor [50].

R v Gordon-Smith [2009] 1 NZLR 721 referred to

           

“Licensing scheme”

 

(2)               Several points could be made about the definition of “licensing scheme” in s 2 of the Act [52]:

 

(a)                It was incomplete in that “scheme” was not further defined, so one had to look for guidance to the Act’s purposes and/or authorities.

(b)                It presumed that the choice of classes of cases in which licenses were offered is that of the operator of the scheme, at least initially.

(c)                It emphasised substance over form, conferring on the Tribunal (in conjunction with ss 148 to 149) the power to decide whether something is a scheme for regulatory purposes.

 

(3)               The definition’s breadth presumably reflected legislative concern that the Tribunal should enjoy jurisdiction over anything in the nature of the scheme [52].

(4)               The Interpretation Act 1999 provided that words in the singular include the plural and words in the plural include the singular.  The definition would ordinarily be interpreted as permissive meaning that the definition admits, but is not confined to, schemes comprising more than one class.  Only if the context and the legislative purpose required it, must “classes” exclude the singular [53].

(5)               It was accepted that the word “class” distinguishes one group from another.  However, for the Tribunal’s regulatory purposes a class could identify any combination of copyright works, licensable activities and prospective licensees contemplated by s 148 but it need not follow that a scheme must possess more than one class.  All that was necessary to distinguish the class was that there should exist another class of persons who would not be offered licenses on the same terms.  That other class could comprise people excluded from the scheme altogether [54].

New Zealand Press Association Limited v Trustpower Limited [2006] BCL 343 (HC)referred to

(6)               A licensing body might find it efficient to offer a scheme comprising a single class where there existed a substantial number of prospective licensees all requiring access to the same repertoire on the same terms [55].

(7)        The respondents’ submission that what CLL referred was not a scheme but merely a licence, focusing on the terms of the standard form licence which contained nothing express to show that it formed part of a scheme, was rejected.  The authorities established that a scheme was a standing offer, the terms of which were formulated by the licensing body and extended to a class of persons, any of whom could accept the offer and take up the licence without further negotiations.  It was this quality that distinguished a scheme from a series of individually negotiated licences [56]. 

Performing Right Society Limited v Working Men’s Club and Institute Union Limited [1988] FSR 586; Universities UK Limited v Copyright Agency Limited [2002] RPC 36; Saturn Communications Limited v SKY Network Television Limited (1997) 8 TCLR 26; New Zealand Press Association v Trustpower Limited [2006] BCL 343; and Candy Rock Recording Limited v Phonographic Performance Limited CT34/1996, 6 November 1996; The Association of Independent Radio Contractors Ltd v Phonographic Performance Ltd PRT35/78, 29 May 1979 (UK Performing Right Tribunal) all referred to 

(8)        As a general proposition, and subject to the Tribunal’s oversight, the Act allowed a licensing body to decide whether and upon what terms it would offer licences [57]. 

(9)        The Tribunal’s powers were designed to check misuse of market power but that objective did not require a different construction of “licensing scheme”.  A requirement that any licensing scheme offered by a licensing body must have more than one class did little, if anything, in itself to curb market power, since the licensing body defines, unless the Tribunal intervenes, which licences and licensable activities fall into each class [58]. 

(10)      Further, such a requirement could easily become something of an exercise in form over substance [58].  

B         Cross Appeal 

(11)      There were limits to the Tribunal’s power under s 149.  That power did not extend to substituting another entirely different scheme to that proposed by the licensing body.  The Act did not compel owners to license their copyright works and if the Tribunal found a proposed scheme wholly unreasonable its remedy was to deny the scheme confirmation [71].

Australian Performing Right Association Limited v Federation of Australian Radio Broadcasters Limited (1999) 46 IPR 20followed.

(12)      The Tribunal’s jurisdiction did not extend to varying a scheme on a licensee-by licensee basis.  That would be antithetical to the scheme of the Act, which provided separately for individually negotiated licences and did not generally confer upon a prospective licensee the right to seek a licence from the Tribunal, otherwise pursuant to a scheme [71].

            Audio-Visual Copyright Society Limited v University of Auckland [2003] 1 NZLR 417 (CA) affirmed.

(13)      The Tribunal could vary a proposed scheme by establishing a group of cases to which different terms applied provided the confirmed terms were available to any prospective licensee who fit the group’s description.  The fewer the prospective licensees falling into the group, the more reluctant the Tribunal may be to provide separately for them.  It all depended on the circumstances [72].