Federal Court raises barriers for claiming copyright in works created by multiple authors

Summary

In the Federal Court decision in Primary Health Care Limited v Commissioner of Taxation [2010] FCA 419,¹ the failure to provide evidence to identify each author of the patient records from a number of medical centres ultimately led to the rejection of a claim that copyright subsisted in those patient records. The court’s insistence that all of the authors be identified before a claim for copyright can be maintained continues a recent trend that impacts all works created through the efforts of many individuals.

Implications from the decision

This decision has commercial significance for any businesses seeking to claim copyright in works created through the efforts of many individuals. In particular, it may be important for businesses involved in software development, musical collaboration and the compilation of reference texts such as travel guides.

Such businesses will need to maintain accurate records identifying each individual involved in the creation of copyright works and their respective contributions, as well as introduce appropriate procedures to ensure those individuals (whether employees or contractors) assign their copyright interests to the business.

They must also consider whether those individuals are working relatively autonomously rather than working together in a collaborative manner. For works which cannot be said to truly be the result of collaborative effort, the contribution of each individual may be considered separately for the purposes of copyright. This will make it even more difficult for such businesses to establish copyright in every component of the works and further complicate any proposed enforcement action.

The decision also emphasises the importance of expressly providing for an assignment of copyright in business sale agreement if copyright is regarded by the purchaser as a valuable asset.

Background

Primary Health Care Limited (PHC) operates a number of medical centres in New South Wales.

The litigation arose out of PHC’s objection to the Commissioner’s assessment of its taxable income in the 1999–2004 income years. PHC claimed that it was entitled to income tax deductions arising from its acquisition (and subsequent use) of copyright interests in patient records as part of its purchase of various medical practices.

For the purposes of this litigation, the parties asked the court to only consider 12 sample practices which had been purchased by PHC under sale of practice agreements entered into with the relevant vendors. Each of the sample practices was owned and operated by a single practitioner (referred to in this article as the relevant practitioner in respect of each sample practice) or in partnership with the relevant practitioner’s spouse, and engaged a number of other practitioners and clerical staff to assist at the practice.

Copyright issues

The court was required to consider the following issues in deciding this case:

1. Did copyright subsist in any part of the patient records and, if so, who owned the relevant copyright?
2. Did PHC acquire any copyright in the patient records?

Subsistence of copyright in the patient records

Identifying the relevant works where multiple authors involved

The majority of the patient records involved input from persons other than the relevant practitioner. In particular, consultation notes consisted of a series of entries written by whichever practitioner was seeing the patient at any given time, while clerical staff recorded a patient’s personal details and medical history on health summary sheets.

Where there were multiple authors involved, these patient records could only be regarded as a single work for the purposes of copyright if they could be regarded as either compilations or ‘works of joint authorship’² (which was not argued by PHC). In any case, the court did not consider that these patient records could be regarded as works of joint authorship since they consisted of individual entries separately contributed by each author using their own intellectual effort, rather than being the product of collaboration between the various authors.

In the case of one patient’s consultation notes from one of the sample practices, each entry had been written by the relevant practitioner (the di Michiel consultation notes). The court accepted that the di Michiel consultation notes could be regarded as an accumulated record forming a single work.

For the remainder of the patient records, it was necessary to consider whether copyright could subsist in the individual entries comprising those patient records, each as a separate work.

Authorship and originality

In order to establish that copyright subsisted in these entries, it was necessary for PHC to show that each entry was an original literary work of an identified author who was a ‘qualified person’ under the Copyright Act 1968 (Cth) (Copyright Act). This meant that PHC was required to establish both the identity of the author and sufficient originality for each entry (rather than for the entries taken as a whole, as in the case of the di Michiel consultation notes).

Drawing on the approach taken in recent cases on this issue,³ the court emphasised the importance of identifying the author in order to establish originality. As originality requires that the work ‘originated’ with the author and that it was not merely copied from another work, the court did not consider that it would be possible to establish that a work was an original product of independent intellectual effort without identifying the author. Further consequences of failing to identify each author for the purposes of PHC’s copyright claim were that:

• PHC could not establish whether each author was a qualified person as required under the Copyright Act,⁴ and
• even if the other authors could be regarded as employees of the relevant practice, PHC could not prove that such employees created the work in pursuance of the terms of their employment such that copyright ownership would automatically vest in the practice under section 35(6) of the Copyright Act.

In respect of the di Michiel consultation notes, the court was able to discern a continuous narrative displaying sufficient (albeit minimal) independent intellectual effort in their expression from the relevant practitioner, being a qualified person.

For the remainder of the patient records, PHC failed to provide evidence to identify each author of the various entries in the patient records, which was ultimately fatal to its copyright claim in those patient records. In any case, the court did not consider that such entries (which were restricted to recording the names of medical conditions and medications, as well as physiological and pathological data) were sufficiently substantial or original to qualify as original literary works. While there was considerable medical expertise and professional skill underlying the diagnosis of such conditions, the selection of such medications or the interpretation of such data, the relevant independent intellectual effort required to produce an original literary work needed to be directed to the expression of an idea rather than its formulation.

Acquisition of copyright in the patient records

Except in the case of one of the sample practices, the sale of practice agreements did not expressly provide for the transfer of copyright in the patient records to PHC. Assuming that copyright subsisted in the patient records and that the owners of such copyright were the relevant vendors under those agreements, copyright could only have been transferred to PHC in the absence of any explicit provision for copyright if either:

• properly construed, the description of one or more of the assets subject to the sale included copyright in the patient records, or 
• the implication of a term transferring copyright in the patient records to PHC was necessary to give business efficacy to the agreement.

The court found that, under the sale of practice agreements, the relevant vendor was required to transfer whatever was required for the continued operation of the relevant practice. The issue was whether this included copyright in the patient records on the proper construction of the agreements. Similarly, a term providing for the transfer of copyright in the patient records to PHC could only be implied if PHC’s acquisition of such copyright was necessary for the continued operation of the relevant practice.

Drawing on the distinction between copyright and the property in the medium in which copyright subsists, the court considered that it was not necessary for PHC to own the copyright in the patient records for it to be able to carry on its business. While the court accepted that it was necessary for the practitioners at the PHC medical centres to be able to draw on the information in the patient records, this was achieved by PHC’s acquisition of the ownership of the physical patient records. Accordingly, PHC did not acquire any copyright in the patient records under the sale of practice agreements.

This article was written by and Irene Zeitler, Partner, Melbourne and Steve Wong, Solicitor, Melbourne.

Endnotes

1. Full decision 
2. A ‘work of joint authorship’ is defined under section 10 of the Copyright Act as a work that has been produced by the collaboration of two or more authors and in which the contribution of each author is not separate from the contribution of the other author or the contributions of the other authors.
3. In particular, Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCA 44 and IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458. Also see Freehills’ review of the Phone Directories case.
4. Under the Copyright Act, a qualified person includes an Australian citizen or resident.

More information

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