In a landmark decision handed down in February this year, the Federal Court found that the flute riff from Men At Work's chart-topping 80's hit Down Under was a substantial reproduction of the equally iconic children's folk tune Kookaburra (Sits in the Old Gumtree). It was held that the owner of the infringed copyright, Larrikin Music Publishing Pty Ltd, was entitled to recover damages from the band's record label and publishing company, Sony BMG Music Entertainment and EMI Songs Australia ("the respondents").
Larrikin's counsel initially sought 40-60% of past and future income derived from the song, which had reached number 1 on the Australian, British and American charts netting millions in sales. The respondents argued that this figure "grossly over-reaches a proper allocation of any such entitlement". The court concluded that quantification of the loss or damages would be best determined at a separate hearing. This article sets out the decision the court made with respect to damages.
The Award of Damages
On 6 July 2010, the Federal Court ruled that damages would not stem from an infringement of copyright under the Copyright Act 1968 (Cth). Instead, Larrikin's entitlement to damages was for misrepresentations made by the respondents to the royalty collecting societies, APRA and AMCOS, namely by falsely claiming that:
the performance and mechanical reproduction of 'Down Under' did not infringe the copyrights in any other work; and
they were therefore entitled to all of the income from its exploitation.
These misrepresentations from the respondents were ruled to be actionable under s.82 of the Trade Practices Act 1974 (Cth), which states that the economic loss suffered through the contravening conduct of another may be recovered. Neither party objected to framing the question in this way as this approach is commonly applied to cases involving intellectual property. This allowed the judge, Jacobson J to apply the principles in Ludlow Music Inc v Williams (No 2), to calculate damages as a percentage of income payable in a hypothetical licensing agreement that would have been struck by willing participants, taking into account the various factors that appropriately shape such agreements.
The Hypothetical Bargain
The principal factor that was taken into account was the significance of the two bar riff in the context of the Down Under song. Larrikin emphasised the "musical and thematic" importance of the sample. The respondents replied that the riff is qualitatively and quantitatively insignificant in the context of Down Under. They stressed that the sample was not publicly recognised for over 20 years, not even by Larrikin's principal, Norman Lurie, until it was brought up in an episode of ABC's Spicks and Specks. These issues were weighed up in considering what sampling agreements which are commonly negotiated in the music industry would be a "comparable arrangement".
One factor that required particular consideration regarding this hypothetical agreement was the date on which it would have been agreed upon. If it was said to have taken place when the song was reissued, following the addition of the flute riff in 1982, the prior copyright owners of 'Kookaburra' would have had substantially more bargaining power over the licensee. At that point Marion Sinclair, the original composer of Kookaburra, was still alive and the riff was well recognised, while Men at Work were still relatively unknown. This would not be the case had the agreement taken place in 2002, as contended by the respondents. This argument was based on the six-year limitation period on claims arising under the Trade Practices Act having effect on the current proceedings initiated by Larrikin in 2008. Presumably to prevent a possible avenue for appeal, Jacobson J determined that regardless of "whether the hypothetical bargain is assessed at 1982 or 2002, the percentage interest payable is at the lowest end of the spectrum".
Larrikin provided various examples of comparable arrangements that supported their claim for 25-50% of royalties, such as Paris Hilton paying a third of her royalties for sampling "Kingston Town" in "Stars are Blind", and Rihanna shelling out 40% for using "Tainted Love" in her song "SOS". Ultimately, none of the examples put forward by Larrikin were given much weight following Lurie's admission in cross-examination that the samples subject to these comparable arrangements were generally more recognisable and extensively used than 'Kookaburra' was in 'Down Under'. These two factors were established as being most informative of the negotiations in a hypothetical bargain of this kind. The court favoured the respondents' objective argument regarding the significance of the sample. While recognising the value in sampling 'Kookaburra' to benefit from the connotations it evoked, Jacobson J determined that the significance of the deliberate reproduction was merely "to add Australian flavour to an otherwise heavily Australian-flavoured song."
Recognising the Inherent Difficulty
Before passing judgement, the court expressed that comparing sampling agreements in such a way can be problematic and must therefore be "approached with caution". Every sample is unique and often integrated through diverse techniques to serve different purposes. This makes it increasingly difficult to value such a piece of music (and indeed any intellectual property) in the same way one could do land or other forms of property. Awarding damages as a percentage of ownership, pursuant to the Trade Practices Act, demands this comparative process, which essentially "relies on articles of the same kind and the subject of frequent sale and purchase". The failure to recognise the intrinsic difference between art and other commodities means we are often forced to accept vague and seemingly erratic judicial estimations in cases requiring quantification of a claimant's percentage interest.
The court found the figures put forward by Larrikin to be "excessive, overreaching and unrealistic" and instead awarded 5% of past and future royalties dating back to 2002. While considerably less than initially sought, this still amounted to several hundred thousand dollars.
Benji Kramer is a media/law student at Macquarie University.