ava i lab le at www.sc ienced i rec t . com
www.compseconl i ne .com/ publ i ca t ions /prodc law.h tm
c o m p u t e r l a w & s e c u r i t y r e p o r t 2 3 ( 2 0 0 7 ) 2 8 5 – 2 8 9
Case note article
Linking your way to liability? – Cooper v. Universal MusicAustralia Ltd [2006]
David Naylor, Andrew Jaworski
Field Fisher Waterhouse LLP, London, UK
a b s t r a c t
Although the Internet has provided the music industry with a new system for marketing
and delivering its copyrighted material to consumers, it has also created significant new
challenges. As recent case law in the US and Australia demonstrates (e.g. see MGM Studios,
Inc v. Grokster Ltd 125 S Ct 2764 (2005) (hereinafter ‘‘Grokster’’); Universal Music Australia Pty
Ltd v. Sharman License Holdings Ltd [2005] FCA 1242 (hereinafter ‘‘KaZaA’’)) the Internet can
be used to facilitate mass copyright infringement. The Full Federal Court of Australia in
Cooper v. Universal Music Australia Ltd [2006] FCAFC 187 recently upheld a ruling that the op-
erator of a website that contained hyperlinks to unauthorised MP3 music files on third
party websites had authorized the infringement of the copyright in those sound
recordings. The company’s Internet service provider (‘‘ISP’’) and one of its company direc-
tors were also found liable. An employee’s appeal, however, was successful. This article
comments on the decision and looks at the possible implications for website operators
in the UK.
ª 2007 Field Fisher Waterhouse LLP. Published by Elsevier Ltd. All rights reserved.
1. Facts
Mr Stephen Cooper (‘‘Cooper’’) owned the domain name
‘‘mp3s4free.net’’ and operated the ‘‘MP3s4FREE’’ website (the
‘‘Website’’). The Website allowed Internet-users to access
copyright protected sound recordings on third party Websites
via hyperlinks. The Website was highly structured, contained
numerous references to linking and downloading and allowed
users to automatically add hyperlinks. When a user clicked on
a hyperlink, an MP3 file was transmitted directly to that user’s
computer from remote servers. The Website itself did not con-
tain infringing material. Cooper derived income from the
Website through advertising arrangements. The ISP, E-Talk
Communications Pty Ltd (‘‘E-Talk’’) and Com-Cen Pty Limited
(‘‘ComCen’’) hosted the Website largely for free in exchange
for advertising on that site. Mr Liam Bal (‘‘Bal’’) was the direc-
tor and controlling mind of these two small and tightly-knit
companies.
A number of Australian record companies (and other enti-
ties that owned copyright in sound recordings) commenced
proceedings against E-Talk, ComCen, Bal, Cooper and an em-
ployee of the ISP, Mr Chris Takoushis (‘‘Takoushis’’). In 2005
the primary judge, Tamberlaine J, found that Cooper’s hyper-
linking per se did not infringe copyright by ‘‘communicating’’
the works to the public. However, he granted declaratory and
injunctive relief against all the defendants, finding them liable
for authorizing the copyright infringement for those who
uploaded and downloaded the unauthorized MP3 files.1 The
trial judge found that the ISP’s behaviour pre-dated the ‘‘safe
harbour’’ provisions introduced into Australia’s Copyright Act
1 Universal Music Australia Ltd v. Cooper [2005] FCA 972.0267-3649/$ – see front matter ª 2007 Field Fisher Waterhouse LLP. Published by Elsevier Ltd. All rights reserved.doi:10.1016/j.clsr.2007.03.007
c o m p u t e r l a w & s e c u r i t y r e p o r t 2 3 ( 2 0 0 7 ) 2 8 5 – 2 8 9286
1968 (Cth) (‘‘Act’’) by the US Free Trade Agreement Implementa-
tion Act 2004 (Cth)2 but even if those provisions could be ap-
plied retrospectively, the ISP would still have been found
liable. The ISP referred users to an online location using infor-
mation location tools or technology, an activity classified as
‘‘Category D’’ under the Act.3 Broadly speaking, to rely on
the relevant ‘‘safe harbour’’ defence under Australian law,
an ISP:
- must adopt and implement a policy of terminating the
accounts of repeat infringers;
- must not receive a financial benefit from the infringing ac-
tivity if it has the right and ability to control that activity;
- must act expeditiously to remove or disable access to mate-
rial once it has been notified, or has become aware of cir-
cumstances from which it is apparent, that material is
likely to be infringing.4
According to the trial judge, these conditions were not met.
Apart from ComCen, the defendants appealed and on 18 De-
cember 2006, the Full Federal Court upheld the decision that
Cooper, E-Talk and Bal had authorized copyright infringe-
ment. Takoushis’ appeal was successful.
2. Statutory background
Section 85 of Part IV of the Act provides that copyright in
a ‘‘sound recording’’ includes the exclusive right to make
a copy of the sound recording5 and ‘‘communicate’’6 the
recording to the public.7 Users who upload and download
copyright protected material without permission infringe
the owner’s exclusive rights. Section 101(1) of the Act also
provides:
.a copyright.is infringed by a person who, not being the owner
of the copyright, and without the licence of the owner of the copy-
right, does in Australia or authorizes the doing in Australia of,
any act comprised in the copyright.
It was argued that the defendants’ conduct authorized the
infringement of the copyright in the sound recordings. Section
101(1A) of the Act provides that in deciding whether a person
has authorized the doing in Australia of any act comprised in
the copyright, the matters that must be taken into account by
the Court include:
‘‘(a) the extent (if any) of the person’s power to prevent the doing of
the act concerned;
(b) the nature of any relationship existing between the person and
the person who did the act concerned;
2 See Part V, Division 2AA Act.3 s116AF Act.4 Ss 116AG and 116AH Act.5 s85(1)(a) Act.6 A recording is ‘‘communicated’’ if it is made available online
or electronically transmitted; see s10 Act.7 s85(1)(c) Act.
(c) whether the person took any other reasonable steps to prevent or
avoid the doing of the act, including whether the person complied
with any relevant industry codes of practice.’’
The defendants sought to rely on section 112E of the Act as
a defence, namely that:
.[a] person (including a carrier or carriage service provider) who
provides facilities for making, or facilitating the making of, a com-
munication is not taken to have authorized any infringement of
copyright in an audiovisual item8 merely because another person
uses the facilities so provided to do something the right to do
which is included in the copyright.
3. The decision
3.1. Cooper
Branson J noted that prior to the addition of section 101(1A),
the word ‘authorizes’ in the context of copyright infringement
had been held to mean ‘‘sanctions, approves or counte-
nances’’.9 Branson J went on to say that the legislation that
introduced section 101(1A), the Copyright Amendment (Digital
Agenda) Act 2000, did not intend to alter the meaning of that
word but merely disclosed an intention to guide the process
by which a judgement is reached as to whether a person ‘‘au-
thorized’’ a restricted activity. Kenny J gave detailed consider-
ation to the case law regarding ‘‘authorization’’ prior to the
introduction of section 101(1A) of the Act, rejecting the appel-
lant’s proposition that the concept of ‘‘authorization’’ was to
be understood in a narrow way. Relevant considerations in-
cluded the degree of ‘‘control’’, the nature of the relationship
and the knowledge or reasonable suspicion that the infringing
act would be done. Kenny J stressed that the degree of ‘‘con-
trol’’ required for there to be ‘‘authorization’’ was a question
of fact and degree in each case.
3.1.1. Power to preventCooper argued that he should not be held to have authorized
infringement because:
(a) an MP3 file had been made from a sound recording in
another format (e.g. from a compact disc);
(b) an MP3 file had been made generally accessible over the
Internet; and
(c) a person accessed an MP3 file that another person had
made generally accessible over the Internet.
The Court rejected this argument. Branson J concluded
that:
‘‘a person’s power to prevent the doing of an act comprised in
a copyright includes the person’s power not to facilitate the doing
8 A sound recording is an audiovisual item within s112E; sees100A Act.
9 Australasian Performing Right Association Limited v Jain (1990) 26FCR 53 at 57-60.
c o m p u t e r l a w & s e c u r i t y r e p o r t 2 3 ( 2 0 0 7 ) 2 8 5 – 2 8 9 287
of that act by, for example, making available to the public a tech-
nical capacity calculated to lead to the doing of that act’’.10
The Court found that Cooper had the power to prevent the
copying in Australia of copyright sound recordings via the Web-
site because he was responsible for its creation and mainte-
nance, the principal content of which comprised links to other
Websites and files contained on other servers. Cooper deliber-
ately established the Website so that it allowed the automatic
addition of hyperlinks without the need for his control.
3.1.2. Nature of relationshipThe Court rejected Cooper’s submission that he did not have
the requisite relationships with those who made the MP3 files
accessible or those who downloaded the files. According to
Branson J, there was a relationship between Cooper and the
downloaders because Cooper benefited financially from spon-
sorship and advertisements on the Website. He had a commer-
cial interest in attracting users to the Website for the purpose
of copying digital files. Kenny J also found there was a direct
relationship between Cooper and those that made the digital
files available when he created the facility for them to put
links on the Website.
3.1.3. Other reasonable stepsBranson gave little weight to Cooper’s use of disclaimers on
the Website, suggesting that they were purely cosmetic.
According to Branson J, the disclaimers misstated Australian
copyright law in a material way and their inclusion did not
constitute a reasonable step to prevent or avoid the infringe-
ment of copyright. Kenny J saw the Website as an invitation
to use the hyperlinks provided and its principal purpose was
to enable downloads of infringing sound recordings. A warn-
ing on the Website that some downloading could be illegal
did not lessen the force of the invitation.
The Court found that Cooper could not rely on the defence
set out under section 112E of the Act and had infringed the
record companies’ copyright by authorizing users to make
copies of the sound recordings and communicate those sound
recordings to the public in Australia.
3.2. E-Talk and Bal
In considering the factors under section 101(1A) of the Act,
Branson J concluded that E-talk:
- had power to withdraw its hosting services and therefore
prevent the infringement; and
- could have taken, but did not take reasonable steps to pre-
vent or avoid the doing of the acts of infringement.
Kenny J agreed but placed little weight on the remote rela-
tionships between E-Talk, the users of the Website and
remote providers of music under section 101(1A)(b). Branson
J placed no weight on this consideration.
The Court rejected the attempt by E-talk and Bal (as
E-Talk’s controlling mind) to rely on the defence provided by
10 [2006] FCAF 187 at 41.
section 112E of the Act. Kenny J cited the decision in KaZaA11
where Wilcox J noted that section 112E ‘‘does not preclude
the possibility that a person who falls within the section
may be held, for other reasons, to be an authorizer’’. Kenny J
noted that these ‘‘other reasons’’ depended on the matters
identified in section 101(1A) of the Act and any other relevant
matters.
Branson J agreed with the primary judge’s finding that
E-Talk was aware of the high level of usage of the Website
and the related copyright problems but took no steps to
prevent copyright infringement taking place. Rather than
withdrawing hosting of the Website, or otherwise placing
pressure on Cooper to prevent it from being used for the pre-
dominant purpose of copyright infringement, E-Talk (and Bal
as the controlling mind) sought to achieve a commercial ad-
vantage from advertising on the Website. In these circum-
stances, E-Talk and Bal went further than providing the
facilities that were used to infringe the record companies’
copyright and were found liable for authorizing the copyright
infringements.
3.3. Takoushis
The Court disagreed with the primary judge and found that, in
considering the factors under section 101(1A), the evidence
did not establish that Takoushis:
- had any personal power, as an employee, to prevent the
copyright infringement;
- had any relevant relationship between the users of the
Website or the operators of the remote Websites; or
- could take any reasonable step to personally prevent or
avoid the copyright infringement.
Although it would have been a reasonable step for
Takoushis’ employer to have terminated its hosting of the
Website absolutely or unless he removed the hyperlinks
facilitating copyright infringement, the evidence did not es-
tablish that Takoushis had the necessary authority to do so
himself.
4. Impact for UK
4.1. ISPs
Most ISPs in the UK benefit from protection under the Elec-
tronic Commerce (EC Directive) Regulations 2002. In general
terms, these protect ISPs from any liability that might other-
wise arise for caching, hosting or transmitting illegal third
party content. The caching and hosting safe harbours apply
provided that, if and when the ISP becomes aware of the exis-
tence of the illegal material, the ISP removes or disables access
to it.12 There is no need to actively monitor the site, however.
The ‘‘mere conduit’’ defence provides that where a service
consists of either a transmission in a communication network
of information which has been provided by a recipient of the
11 [2005] FCA 1242 at 399.12 r19 Electronic Commerce (EC Directive) Regulations 2002.
c o m p u t e r l a w & s e c u r i t y r e p o r t 2 3 ( 2 0 0 7 ) 2 8 5 – 2 8 9288
service or where the service consists of the provision to access
to a particular communication network then the service pro-
vider will not be liable if it:
- did not initiate the transmission;
- did not select the receiver of the transmission; and
- did not select or modify the information in the transmission.13
In June 2005 the UK’s Department of Trade and Industry
(‘‘DTI’’) published a consultation document, seeking views as
to whether the UK should limit the liability of providers of hy-
perlinks, location tools and content aggregation services. The
results, published in December 2006, indicate that the UK does
not feel there is substantial evidence to support the case for
such an extension (as has occurred in Austria, Spain, Portugal,
Hungary and Liechtenstein).
As a result, if the same fact situation arose as in Cooper in
the UK, the ISP would still be liable.
4.2. Hyperlinks
Like the Act, the UK’s Copyright, Designs and Patents Act 1988
also prohibits the authorization of copyright infringement.14
Despite cases like KaZaA and Grokster emerging from the US
and Australia, copyright owners in the UK have been unwill-
ing to take their battles to the courts.15 CBS Songs Ltd v.
Amstrad Consumer Electronics Plc,16 remains the current UK
authority on the authorization of copyright infringement,
a case decided in a pre-digital era. The case concerned
twin-deck tape recorders. In that case, Lord Templeman
stated that ‘‘Amstrad did not sanction, approve or counte-
nance an infringing use of their model’’ finding that ‘‘an au-
thorization means a grant or purported grant, which may be
express or implied, of the right to do the act complained of’’.
He found that ‘‘Amstrad conferred on the purchaser the
power to copy but did not grant or purport to grant the right
to copy’’. According to Lord Templeman, the Amstrad situa-
tion was as described in Citing CBS Inc v. Ames Records and
Tapes Ltd,17 namely that:
[a]ny ordinary person would, I think, assume that an authoriza-
tion can only come from somebody having or purporting to have
13 r17 Electronic Commerce (EC Directive) Regulations 2002; Notethat in Sony Music Entertainment (UK) and others v EasyinternetCafeLtd [2003] EWHC 62 (Ch) it was held that the ‘mere conduit’ de-fence set out in the Electronic Commerce (EC Directive) Regula-tions 2002 should exempt an ISP from liability in respect togiving access to a network on which copies are available.14 See s16(2) Copyright, Designs and Patents Act 1988.15 Note that in Nottinghamshire County Council v. Gwatkin, (High
Court of Justice, Chancery Division, June 3, 1997) Boggis QC issueda subpoena to prevent certain journalists publishing a leaked re-port via hyperlinks on websites. The matter was not pursued bythe plaintiff. (see http://www.linksandlaw.com/decisions-86.htm(Accessed 9 February 2007).16 [1987] 2 WLR 1191 (hereinafter ‘‘Amstrad’’).17 [1981] 2 All ER 812, [1982] Ch 91 where a record library that lent
out records and simultaneously offered blank tapes for sale ata discount did not authorize the infringement of copyright inthe records.
authority and that an act is not authorized by somebody who
merely enables or possibly assists or even encourages another
to do that act, but does not purport to have any authority which
he can grant to justify the doing of the act.18
The argument that facilitating copyright infringement
does not amount to authorization is somewhat at odds
with the broader position that has been taken in Australia
and Branson J’s conclusion that ‘‘a person’s power to prevent
the doing of an act comprised in a copyright includes the
person’s power not to facilitate the doing of that act by, for
example, making available to the public a technical capacity
calculated to lead to the doing of that act’’. Although this
Australian decision is only of persuasive authority in the
UK, it is possible that a UK court could, as Australian courts
have done, distinguish Amstrad on its facts. As US and Aus-
tralian case law has shown, even the presence of dis-
claimers, terms of use and warnings on a Website may not
necessarily be enough to avoid liability in those jurisdictions
for authorizing copyright infringement. Given these recent
authorities, it would also be risky behaviour for Website
owners not to remove third party infringing content when
aware of its existence.
4.3. Search engines
Cooper submitted that his Website was, in relevant respects,
no different from other search engines, drawing an analogy
between his Website and Google. He also relied on the deci-
sion in Perfect 10 Inc v. Google Inc,19 a decision from the US.
The Court rejected Cooper’s analogy partly because the US
decision was based on its doctrine of ‘‘fair use’’, a doctrine
particular to US copyright law, and much more permissive
than the ‘‘fair dealing’’ defence that exists in Australia and
the UK. Another distinguishing factor was the fact that Goo-
gle was a general purpose search engine rather than a Web-
site designed to facilitate music downloads. Although
Branson J’s statement that ‘‘the assumption that Google’s
activities in Australia do not result in infringements of the
Act is untested’’ may cause some concern for search engine
operators, the judgment does emphasise that whether one
person has authorized another to commit a copyright
infringement will depend on the circumstances of each par-
ticular case.
5. The way forward?
Although the DTI noted in its report into whether the UK
should limit the liability of providers of hyperlinks, location
18 [1981] 2 All ER 812 at 821, [1982] Ch 91 at 106 per Whitford J.19 416 F.Supp.2d 828 (C.D. Cal 2006). In that case, although Perfect
10 Inc were successful in their request for an injunction toprevent Google from allegedly copying, displaying and distribut-ing Perfect 10 photographs as thumbnail images, the Court alsofound that Google was not liable under the US doctrine of contrib-utory or vicarious infringement; citing Sony Corp of America v.Universal City Studios, Inc. 454 U.S. 417 (1984); Grokster and A&MRecords, Inc. v. Napster, Inc., 239 F.3d 1004, 1013–14 (9th Cir. 2001).
c o m p u t e r l a w & s e c u r i t y r e p o r t 2 3 ( 2 0 0 7 ) 2 8 5 – 2 8 9 289
tools and content aggregation services that there had been
‘‘no significant legal action in the UK’’, it also noted that
there have been a number of contradictory court cases since
July 2002 involving hyperlinks and location tool services pro-
viders in France and Germany. The DTI proposes to await the
view of the EC on this issue when it publishes its second
review paper on the Electronic Commerce Directive in 2007.
It is hoped that this review will result in a uniform approach
amongst the EU and remove some of the uncertainty in this
area. In the meantime, it remains a distinct possibility that,
in some circumstances, hyperlinking may give rise to
liability in the UK.
An application was filed with the High Court of Australia on
23 January 2007 seeking special leave to appeal the Full Federal
Court’s decision.
David Naylor ([email protected]) is a partner and Andrew
Jaworski ([email protected]) is a solicitor (Australian
qualified) in the Technology Law Group at Field Fisher Waterhouse
LLP in London.