The Nature and Function of Intellectual Property: Lessons from Down Under

Paper presented at the Intellectual Property Society of Australia and New Zealand Inc

RTF version (111 kb)

When I was teaching at Oxford I arranged an after dinner lecture to be given to law finalists after their exams. The students' final exams are all taken over a couple of weeks at the end of their degree. The pressure is intense. The relief at the end of this period is always palpable. The dinner was the first formal occasion after exams. I asked a distinguished Lord Justice of Appeal to speak at the dinner. He had studied years ago at the college which was to host the dinner. He asked about the topic on which he should speak. I replied, "Something light and fun for the students who have just finished their finals". He remained silent. Jokingly, I said "Maybe something on the rule against perpetuities". Unfortunately, this judge was a literal sort of a man and I had not been very precise about what I meant by "fun". He began his after dinner speech with the line "I was asked to speak tonight on the light and fun topic of the rule against perpetuities". The students, most of whom had had more than a little to drink, thought this was hilarious. Unfortunately, there was no more laughter for the next hour.

I start with this anecdote because I was asked to make a speech before dinner tonight with an implication that I might speak on something light. My focus is upon an interesting and contemporary case about which many of you will be familiar, although with a tragic ending. However, underneath the interesting facts of the case is a broader point, not particularly light, about one of most fundamental and difficult questions that underlies much of the work of those present this evening. This is the question of what is "intellectual property". I want to begin and end with some comments on this question.

Dr Michael Spence suggested that the term "intellectual property" derives from the decision in 1845 in Davoll v Brown.^[1] In that case, Justice Woodbury, sitting in the District Court in Massachusetts spoke of intellectual property as "the labours of the mind". Even assuming that the labours of the mind is a meaningful concept, the difficulty with this language is that in law the concept of "property" does not refer to a thing; it is a description of a legal relationship with a thing. This point was made plain by Jeremy Bentham,^[2] and before him by William Blackstone who opened his second book by describing property rights as "rights which a man may acquire in and to such external things as are unconnected with his person".^[3]

When we are dealing with tangible things, the thing which is the subject of rights is clear: it is the goods or the land.^[4] It is easy to speak of property rights where the object of the property, or thing, is goods or land. But the difficulty with intellectual property rights is that it is not clear what the "thing" is which is the object of the property right. There is an intuitive appeal in the idea that the object of the right is an intangible thing. So, many people speak of a copyright in the work, or a patent right in the invention, or a trade mark right in the mark. But, as Frederick Pollock recognised more than a century ago, the incorporeal idea which is the work or the invention or the mark is not the object of the right. He argued that the object must be the enjoyment of the work. On this view, the expression intellectual "property right" is not really being used in the common sense of a right in relation to a thing but, in the language of Hohfeld, it is being used in respect of a right in relation to a liberty.

Much more could be said about the use of "property" to distinguish a right in relation to an intellectual liberty from a right in relation to a personal liberty such as bodily integrity or free movement. But I have promised that my remarks about the philosophical conception of intellectual property would be brief. I do not intend to say more about this. In any event, the law does not usually develop directly by reference to philosophical foundations, or even by reference to historical foundations. Part of the reason for this is that the focus of adjudication is resolving, and resolving efficiently, a dispute between parties. Another reason is the limited time that solicitors, counsel, and judges have to devote to questions which are rarely needed to resolve the dispute. Of course, this view about the pressure of time on judges, as opposed to academics, is not unanimously held. A recent review by a distinguished academic historian of Lord Sumption's most recent volume on the Hundred Years' War remarked that the only way that Lord Sumption had time to write his historical works was because he left the pressure of the academic environment, with teaching obligations of up to 10 hours a week, for the far less pressured environment of being a barrister and a judge.

The more immediate influence on the development of law, including intellectual property law, is contemporary context. The history of a doctrine evolves, to use Ronald Dworkin's image, like a chain novel with the context of each case shaping that chapter in the novel. But the context, the subtext of the case, the contemporary attitudes, even the demeanour of the judge are matters that are often lost as the mosaic of the law develops. Looking back, the contemporary authors often see only the decisions and the reasoning, rather than the context, the circumstances outside the courtroom. This is a great pity. Those circumstances are often fundamentally important. The late Brian Simpson knew this. He was an extraordinary legal historian who was scorned by many other historians at the time for his practice of writing potted legal histories on important cases and short sketches on the judges who decided them. So, it was from Brian Simpson that we learned one of the reasons, not stated in any judgment, for the strength of the reaction of Sir Henry Hawkins and the Court of Appeal to the Carbolic Smoke Ball Company in Carlill v Carbolic Smoke Ball. What the Court was told but which did not appear in any report, was that the Carbolic Smoke Ball Company had alleged that in order to avoid fraudulent claims by people who had not used the ball, a person claiming the reward needed to attend their offices to have the smoke ball administered, under the directions of an officer of the company, three times every day for three weeks. Brian Simpson also discovered the ultimate cause of Mrs Carlill's death many years later. Influenza.

I will discuss just one case example this evening, to illustrate the context which shapes a case. The litigation which will be familiar to many of you, discussed some important issues in intellectual property law. The litigation involved EMI Songs and Larrikin Publishing. In the year 3016, this litigation might be cited for any one of a number of fascinating legal points discussed in the various judgments during the litigation.
One legal point is the illuminating discussion by Justice Emmett of the antipathy that Roman law had to monopolies. Perhaps this was why the Romans never recognised intellectual property. Of course, despite the brilliant and extraordinary legal system which the Romans created, they never saw this distinction between rights and things. They did not grasp the distinction between the thing or res and the right to the thing. It was not really until Grotius and Suarez that lawyers began thinking in terms of rights.

Another legal point in the case is the consideration and application of the curious remedial concept of the reasonable royalty. As you are all aware, one remedy for infringement of an intellectual property right is a reasonable royalty which might have been negotiated between a willing buyer and a willing seller. This remedy is not unique to intellectual property. In contract law it is commonly described as Wrotham Park damages after the first instance decision of Lord Brightman in 1974. In torts, a similar award was made under the label of wayleaves, mesne profits, and user damages. Lord Nicholls said that the award was restitutionary. Lord Scott said that it was vindicatory. Some Australian judges have called it compensatory. Australian judges have not yet committed to any final view, although there is a very detailed recent discussion by Justice Yates in Winnebago Industries Inc v Knott Investments Pty Ltd (No 4).^[5]

The litigation might also be cited for the history and background to the Statute of Anne. As the Full Court explained the law of copyright derives from the rights granted in England by the Crown to printers. The power of the guilds in the 16th century saw a Royal Charter of 1556 granted to the Stationers' Company for exclusive and perpetual rights in books that were duly registered with it. The rights granted by the Royal Charter had nothing to do with rewarding authors. Rather, the grant was concerned with the control of the press by the Crown. The Charter made it clear that church and state were never to be subjected to heresy, scandal or descent. A state-sanctioned monopoly was the consequence of this, culminating in the Statute of Anne.
These important issues of law, and the Federal Court's contribution to them, might persist over the centuries in the chain novel that is the development of the law. But I suspect that in a century's time it is unlikely that the case will be remembered for the most important part of its context. That is the current, and completely iconic, nature of the two songs about which the litigation revolved: Kookaburra sits in the Old Gum Tree and Down Under. 

In 1978 an iconic Australian rock band formed. They called themselves Men at Work. Their lead singer was Colin Hay and their lead guitarist was Ronald Strykert. Also in the band was the multi-talented Greg Ham – who sang and played flute, saxophone, keyboard, and harmonica.

In 1978, during a cold winter in suburban Hawthorn in Melbourne they began writing and performing their music. The first song that they released was a self-financed song on their independent label called "Keypunch operator". It was backed by a catchy little tune, as a secondary recording, called Down Under. The band soon became enormously successful. In 1981^[6] after signing with CBS (Colombia Broadcasting System), the most renowned version of Down Under was released as the third single on their debut album Business as Usual.^[7] Men at Work were catapulted to the global stage and became the biggest band on the planet in the early 1980s. Down Under went to No.1 in Australia in 1981, in New Zealand and Canada in 1982, in the UK and United States in 1983. The band sold over 30 million albums worldwide. No other group in the world has ever had its first two singles and its debut album top the US charts. Although the band split soon after, Down Under remained in the national psyche recognised as a de facto national anthem and its quirky music video, recorded on the sand dunes of Cronulla was recognised as an image of Australia all over the world.

Nearly half a century earlier another song was composed. A school teacher and girl guides veteran Marion Sinclair wrote a song which she entered in in a song writing contest run by the Victorian Girl Guides Association in 1934.^[8] She won. Her song was called Kookaburra Sits on the Old Gum Tree. Ms Sinclair died in 1988. Although her song was renowned throughout Australia she never claimed any royalties for it. Two years after her death, the rights to Kookaburra were bought by the managing director of Larrikin from the Public Trustee (as trustee of her estate) for $6,100. Later, there was some dispute about whether Ms Sinclair had assigned the copyright in Kookaburra by entering the song into the Girl Guides competition so that Larrikin had not validly purchased anything. In the Federal Court Jacobson J found that Larrikin had obtained a valid assignment of the copyright in Kookaburra.^[9] 

A quarter century after the release of Down Under, and more than 70 years after Kookaburra had been written, ABC TV played a snipped of Down Under on its music quiz show Spicks and Specks. The host Adam Hills asked the panelists to "name the Australian nursery rhyme this riff has been based on"^[10]. His answer was Kookaburra sits in the Old Gum Tree. This single question and answer was noticed by Larrikin Music.^[11] Larrikin sued, alleging that part of the flute riff of Down Under was copied from Kookaburra Sits on the Old Gum Tree which it claimed had owned copyright.

On 4 February 2010, the Federal Court held that 'EMI had copied a substantial part of Kookaburra, had infringed Larrikin's copyright and misrepresented the work as their own.^[12] Jacobson J considered that two of the four bars from Kookaburra were included in part of the flute riff in the 1979 and 1981 recordings of Down Under and that both of those recordings reproduced a substantial part of Kookaburra. Ham admitted in his affidavit that he was aware of Kookaburra, having heard it in primary school in Australia in the late 1950s. The Down Under video clip also featured Ham playing the flute line while sitting in a mangrove tree. In 2011 an appeal to the Full Federal Court was dismissed. The day after the decision, Hay told The Australian that 'the band had not sought copyright clearance for the flute riff because it was an "unconscious" reference to the children's song^[13].

The Down Under litigation is still fresh in the minds of many people. Unfortunately, one of the most important contextual lessons arising from the context may soon be forgotten as the law is left with the difficult questions of legal theory and philosophy which had been shaped by the context with which we are so familiar. That lesson is the ultimate result of the litigation. Although Larrikin had sought an account of 40-60% of the income, it was ultimately awarded only 5% from 20 May 2002 due to the limitation period.^[14] Justice Jacobson considered the amount sought by Larrikin to be 'excessive, overarching and unrealistic'.^[15] Hay later explained that the 5% amounted to "something like sixty grand". This was after many millions of dollars had been spent in litigation by both parties. In this context, the win by Larrikin seems pyrrhic, but as Hay later said, 'we lost more than them'. Tragically on 19 April 2012 Greg Ham committed suicide at his home.

I began this speech with some of the fascinating legal issues underlying this litigation. But let me conclude with the one, perhaps the largest one, with which I began. When the Managing Director of Larrikin was confronted with a strong public reaction against Larrikin's litigation he said he was "doing his job in protecting lawful ownership of material against theft".^[16] This reflects a very common conception of intellectual property which we see every time we go to the movies and are told that we wouldn't steal a handbag. Until recently almost any respectable lawyer would have rejected this analogy as the conflation of the theft of a thing with the interference with a right. But the expansion of the concept of theft started to erode this view. At the turn of this century, in the year 2000, the House of Lords turned the conception of theft into an offence which seems to be little more than dishonesty in R v Hinks. More and more, we now see academic and practising lawyers breaking down the distinctions between, on the one hand, rights to things and on the other hand rights in relation to rights, or rights in relation to liberties. We see this in relation to the law of trusts. We see this in relation to the law of equitable assignment and charges. And we see this in relation to intellectual property. It may be that this development turns out to bring coherence to the law. And Roman lawyers might even point to analogous concepts such as theft of the use of a thing which existed 2,000 years ago. But for the moment the law will continue with its primary focus on the immediate context and colour of the facts and circumstances. And that context and colour should indicate one very significant difference between breach of an intellectual property right such as copyright, and theft. This difference is indeed 2,000 years old. As Emmett J explained on the appeal in the Larrikin litigation, there is no requirement that there be a finding of animus furandi (an intention to steal) before there will be an infringement. There is no necessity to show a guilty mind. As the court concluded, "the taking of the melody from Kookaburra was not taken, animus furandi, in order to save effort, Rather, the reproduction was a tribute to the iconicity of Kookaburra, and as one of a number of references made in Down Under to Australian icons". The perhaps the most important aspect of the background and context to the Larrikin litigation is that the language we use, and the analogies and ways we describe intellectual property, can be important. Whatever the philosophical conception of the rights which we commonly describe as intellectual property, the proof of their infringement is not the same as proof of theft.

And on that note I leave you with a YouTube comparison of Down Under and Kookaburra. The tunes will be played first, and then the flute riff and Kookaburra sequence isolated.

^[2] Bentham, An Introduction to the Principles of Morals and Legislation, ed by W Harrison (1948) at 337, n 1.

^[3] W Blackstone Commentaries on the Laws of England (1766) vol 2 "Of the rights of things".

^[4] Cf M Wonnacott Possession of Land (2012).

^[5] [2015] FCA 1327.

^[6] T Conomy, Down Under p 40 & 78

^[9] Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2009] FCA 799.

^[10] T Conomy, Down Under p 112

^[11] (administered by parent company Music Sales Corporation in New York City)

^[12] Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2010] FCA 29.

^[13] J Kelly and I Shedden, Larrikin Music Publishing snares Land Down Under royalties (5 February 2010, The Australian) http://www.theaustralian.com.au/arts/larrikin-music-publishing-snares-land-down-under-royalties/story-e6frg8n6-1225826893478
T Conomy, Down Under p 195-196.

^[14] Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (No 2) [2010] FCA 698.

^[15] Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited (No
2) [2010] FCA 698.

^[16] T Conomy, Down Under p 126-129, 130-131