In a 1999 proceeding, Australian amusement company Milwell Pty Ltd and Olympic Amusements Pty Ltd locked horns over a seemingly unlikely battleground: the copyright of prize scales for video draw poker games. Olympic accused Milwell of infringing its copyright in these scales, sparking a precedent that explored the boundaries of innocent infringement of copyright.
At the heart of the dispute lay the question of whether the prize scales – essentially numerical tables determining payouts in the games – could be considered “original literary works” protected by copyright. The trial judge sided with Olympic, finding both originality and ownership of the copyright. However, Milwell, deemed infringing but innocent under the Copyright Act 1968 (Cth) (the Act), appealed the decision.
Milwell’s defence hinged on two critical arguments. First, they challenged the very notion of originality in the prize scales, claiming their simplicity rendered them ineligible for copyright protection. Second, they disputed Olympic’s joint authorship claim, suggesting mathematicians, not Olympic employees, were the true authors.
The appeal court, however, upheld the trial judge’s judgment. It was determined that although the individual numbers might be commonplace, the specific arrangement and sequence within the scales constituted sufficient originality for copyright protection. Importantly, the court rejected Milwell’s attempt to isolate the mathematicians’ contributions, emphasising the entire work, including their collaboration, as the subject of copyright.
The story does not end there. A second layer of the case explored section 115(3) of the Act. This section offers a special defence of “innocent infringement” to defendants who unknowingly infringe copyright, absolving them from damages but still requiring an account of profits to the copyright holder.
While the trial judge deemed Milwell eligible for this protection, citing a lack of awareness among its management, the appeal court disagreed. It held that Milwell fell short of proving the necessary active lack of awareness, failing to present convincing evidence about the state of mind of its representatives. Furthermore, the court dismissed the argument that numerical tables deserved a lower threshold for awareness, upholding the principle that all copyright works merit equal protection.
Ultimately, the appeal court overturned the trial judge’s section 115(3) ruling, holding Milwell liable for Olympic’s costs in both the appeal and cross-appeal. This case serves as a valuable precedent, not only in the interpretation of originality and authorship in seemingly mundane creations, but also in its strict application of the “innocent infringement” exception under the Act. It reminds us that even subtle forms of copying, even if unintentional, can carry legal consequences in the competitive world of intellectual property.
Key Takeaway
For a defendant to establish an innocent infringer defence, the defendant must establish:
- an active subjective lack of awareness that the act constituting the infringement was an infringement of the copyright, and
- that, objectively considered, he or she had no reasonable grounds for suspecting that the act constituted an infringement.
If you act in the licencing enforcement and compliance team and require more information, or if you have infringed upon copyright material, please contact our office for a free consultation at (02) 9262 5495, or subscribe to our newsletter by visiting https://mclp.com.au/publications/
About Us
MCLP acts for nearly a dozen software providers to protect their copyright material. Led by Damin Murdock and supported by Ms Jane Choi, Ms Bella Chang and Shiqi Cui, our team operates internationally and can deal with intellectual property matters in English, Mandarin, Cantonese, Japanese and Malay In the past few years, our team has recovered more than $3 million for our clients.