Pacific Film Laboratories Pty. Ltd. v. Federal Commissioner of Taxation.

Judges: Barwick CJ
McTiernan J

Windeyer J
Owen J
Walsh J

Court:
High Court (Full Court)

Judgment date: Judgment handed down 9 October 1970.

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Windeyer J.: Exposed photographic film may be developed for its owner by a person who carries on the business of film developing. The owner pays him for this when the developed film is delivered. There is no sale involved in that. The film remains the property of the owner throughout. He paid to have his film developed, not to buy the negatives thereby produced. But the case we are now considering is not that. It is the common arrangement by which in addition to developing film for its owner positive prints or transparencies are made for him from the negative and delivered to him for a price to be paid by him. The prints or transparencies are then in my opinion properly said to be sold to him. They were made by the use of his negative certainly: but they are new chattels. The contract pursuant to which they were produced was I think ``a contract for the sale of future goods by description'' within the meaning of the Sale of Goods Act. Presumably the property in them passed when they were made and were in a deliverable state and appropriated to the contract by their maker. However, we do not have to say when the property passed. The question propounded by the stated case is simply, is the supply of prints and transparencies in such circumstances a sale within the meaning of sec. 17 of the Sales Tax Assessment Act ( No 1) 1930-1966? As I have said, in my opinion it is. I agree in the reasons for that conclusion given by the Chief Justice and my brother Owen in their judgments, which I have read. I wish only to make some observations upon the argument that the law of copyright precludes such a transaction being a sale.

Of course a man cannot buy something that is already his. And the Sale of Goods Acts in force in Australia, all copied from the Sale of Goods Act 1893 of the United Kingdom, it being itself a codification of the common law, treat a sale as a transaction effecting a transfer of ``the general property in the goods''. It was argued that, because the owner of a photographic negative has copyright in it as an artistic work, someone else who makes prints from it for him cannot have the general property in them as goods that he can sell to him. There is I think here a fallacy. It lies in the failure to distinguish between the copyright as incorporeal property and property in the material thing which is the subject of the copyright.

The great case of
Jefferys v. Boosey (1854) , 4 H.L.C. 815 , established that copyright in published works had come to depend on statute, the Act of 1709, 8 Anne, c. 19, not on the common law. That view of the Act of 1709 had been anticipated in
Donaldson v. Beckett (1774) 4 Burr. 2408 ; 2 Bro. P.C. 129 . But, as the protection that that Act gave to an author began with and dated from the publication of his work, rights in respect of unpublished works were still governed by the common law. The question whether copyright was known at all at common law had been a great subject of judicial controversy in the eighteenth century. It continued to be agitated in the courts. Opinions were still divergent. A count of judges' heads, pro and con over the years, appears in Holdsworth, History of English Law, vol. 6, p. 379 n: and see the judgment of Erle J. in Jefferys v. Boosey, supra, also the judgment of the Court of Exchequer, delivered by Pollock C.B., in
Chappell v. Purday (1845) 14 M. & W. 303 at p. 317. An instructive account of the early history of copyright, with the arguments that were adduced in the earlier controversies, in law, and eighteenth-century philosophy, may be found in the Treatise on the Law of Copyright by G. T. Curtis, published in Boston, U.S.A. in 1847. Copyright today is entirely the creature of statute. It is no longer an emanation of common law. It extends to both published and unpublished works. The old controversies are now dead. But, although the debate has died, much that was said lives on, to guide us in reading the statutes.

The Act now in force in Australia is the Copyright Act 1968. It now governs all questions of copyrights for us. In some cases it may operate in a sense retrospectively: see In
re Dickens , (1935) Ch. 267 , in particular the judgment of Lord Hanworth M.R. at p. 289. But the transactions out of which the present case arises occurred in 1967 and were governed by the British Copyright Act 1911 as in force here, which I shall hereafter refer to as ``the Act'': see the Copyright Act 1912-1966, sec. 8, and
Copyright Owners Reproduction Society Ltd. v. E.M.I. (Australia) Pty. Ltd. (1958) 32 A.L.J.R. 306 . It applied, in the manner set forth in sec. 1, to both published and unpublished works. Section 31 was as follows -

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``No person shall be entitled to copyright or any similar right in any literary, dramatic, musical, or artistic work, whether published or unpublished, otherwise than under and in accordance with the provisions of this Act, or of any other statutory enactment for the time being in force, but nothing in this section shall be construed as abrogating any right or jurisdiction to restrain a breach of trust or confidence.''

It was this that made the statute the sole source of the right, displacing the common law entirely.

Section 2 provided that -

``For the purposes of this Act, `copyright' means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatsoever.''

What was meant by ``the work'' was made clear by sec. 1. It included ``artistic work''; and that was defined by sec. 35(1) to include photographs. Section 21, so far as relevant, was as follows -

``The term for which copyright shall subsist in photographs shall be fifty years from the making of the original negative from which the photograph was directly or indirectly derived, and the person who was owner of such negative at the time when such negative was made shall be deemed to be the author of the work...''

The Act of 1911 was a novelty in applying to both published and unpublished works and in many of its provisions. But much of it repeats earlier enactments or echoes pronouncements that throw light on basic concepts reflected in the Act. For example, the definition of copyright in sec. 2 recalls that Pollock C.B., delivering the judgment of the Court of Exchequer in
Chappell v. Purday , 14 M. & W. 303 , in 1845 - that is after the Act 5 & 6 Vict. c. 45 - said at p. 316, ``A copyright is the exclusive right of multiplying copies of an original work or composition, and consequently preventing others from so doing''. And in Jefferys v. Boosey, supra, Parke B. at p. 920 spoke of ``the exclusive right of multiplying copies; the right of preventing all others from copying, by printing or otherwise, a literary work which the author has published''. These and many similar statements make plain the essential nature of a copyright. It is not a right in an existing physical thing. It is a negative right, as it has been called, a power to prevent the making of a physical thing by copying. At one time the single word ``copy'' meant the right or privilege now called copyright. Men spoke of the sale of the copy meaning that an author had sold to a publisher the right to publish an unpublished work. Illustrations of this usage were given by Lord Maugham, then Maugham L.J., in In re Dickens, supra, at pp. 305-306. Thus it was that Lord Mansfield said -

``I use the word `copy', in the technical sense in which that name or term has been used for ages, to signify an incorporeal right to the sole printing and publishing of somewhat intellectual, communicated by letters''

and later he said that this ``incorporeal right'' is ``detached from the manuscript, or any other physical existence whatsoever''. That was in
Millar v. Taylor (1769) 4 Burr 230 at p. 2396. That was a remarkable case for many reasons. In Burrow's report of it the judgments cover just on a hundred folio pages. The arguments of counsel he did not state, because, he said, they were -

``all of them so very fully and amply taken up again from the Bench and so elaborately expatiated upon, canvassed, and discussed by the judges in delivering their opinions, and the reasons whereupon they formed them.''

Today much that was said in their elaborately erudite judgments is still useful, as the judgments in In re Dickens, supra, shew. But the interest of the case is perhaps mainly historical, and that for several reasons: one being that as Lord Mansfield sorrowfully observed it was the first occasion on which under him his court had not been unanimous. Yates J. dissented. This was the beginning of his differences from Lord Mansfield, which Junius used in his bitter hostility to Lord Mansfield: Junius' Letters No. 41. The views of Yates J. as to the nature of copyright as property can be disregarded now. It is significant, however, that he discerned a weakness, of which I thought there was an echo in the argument we heard. He said (at p. 2362) -

``But the fallacy lies in the equivocal use of the word `property'; which sometimes denotes the right of the person... sometimes, the object itself.''

Theories of jurisprudence have been refined since the eighteenth century; and the concepts

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of ownership and of property, corporeal and incorporeal, have been subjected to much analysis. Academic purists in the use of jurisprudential language now say it is a mistake to speak of an incorporeal right. A right, they say, is essentially incorporeal: property is either corporeal or incorporeal. That may be so. Nevertheless the expression, an incorporeal right, can be defended as simply a transferred epithet which is a not uncommon figure of speech. But defence is not necessary for it would be a pedantic presumption to discard an expression that has long been used in connection with copyright by great lawyers, including Lord Mansfield in the eighteenth century and Lord Maugham in this.

Copyright under the Act is thus properly called an incorporeal right. If copies of a work in which copyright subsists are made in contravention of the Act they are today described as infringing copies: see definition of ``infringing'' in sec. 35. But it is not the copy that infringes the Act but the copyist who made it. Infringing copies are ``deemed to be the property of the owner of the copyright'' and he can recover possession of them or obtain damages for conversion. This provision, sec. 7, of the Act is aimed at the infringer who made the infringing copies. He can be ordered to deliver up all of them that are in his possession as in
Robinson v. Sands & McDougall Pty Ltd. (1916) 22 C.L.R. 124 ; 23 C.L.R. 49 . An innocent infringer, that is a person who when he unlawfully copied was not aware of the existence of copyright with respect to the thing he copied, is not liable except to an injunction against further copying. It is true that copyright in a work is deemed to be infringed by any person who sells any work which to his knowledge infringes copyright, sec. 2(2). But it is only a copy which is made in contravention of the Act which is an infringing copy: see Copinger and Skone James' Law of Copyright, 8th ed., based on the 1911 Act, p. 320; and 10th ed., based on the 1956 statute of the United Kingdom, p. 378. A copy of a thing in which copyright subsists is lawfully made if it was made by the licence of the owner of the copyright, because copyright is not infringed by any acts done with the consent of the owner, sec. 2(1). His licence makes lawful the production of copies authorised to be made: it also authorises doing anything with them that is within the scope of the licence: it may be to sell them or to use them for a particular purpose: see e.g.
Beck v. Montana Constructions Pty. Ltd. (1963) 80 W.N. (N.S.W.) 1578 . But a mere licence to make copies is not an assignment of copyright:
British Actors Film Company Ltd. v. Glover , (1918) 1 K.B. 299 at p. 307. The licence does not authorise the use or disposition of copies in a way that is not within its scope. In the present case the owner of the negatives licensed Pacific Film Laboratories Pty. Ltd. to make prints of them for the purpose of selling them to him. It cannot be said that the owner of a copyright cannot buy a chattel made by his licence. It is not an infringing copy. It is a lawful copy. In this case the contract was for the sale to the owner of the copyright of future goods, namely copies of prints that he by implication licensed to be made for that very purpose. They could only be lawfully sold to him or by his authority because his licence to the copyist to make them was only so that they might be sold to him. His incorporeal right to prevent infringement of his copyright could not prevent his right to have chattels he had agreed to buy delivered to him or absolve him from an obligation to pay for them on delivery as goods sold and delivered. I agree in the order that the Chief Justice proposes.