Copyright licensing and your business – are you entitled to play that music in your waiting room?

A recent decision of the Federal Circuit Court serves as a timely reminder to all businesses – not just businesses such as those in the hospitality or fitness industries which play music as an integral part of their business – of the obligation to obtain appropriate copyright licences for any uses of commercial music (or video) recordings/broadcasts as part of the business. This includes, for example, radios played at employee workstations, music played over phone hold systems and background music or television broadcasts at reception/waiting areas, as well as live performances and other uses including soundtracks to internally produced training videos and marketing materials. As a practical matter, there are very few businesses that will not be required to hold some form of copyright licence.

Recorded songs incorporate two separate works which are protected by copyright, and which are typically owned by different parties. Recordings are comprised of copyright in the musical work, being the composition itself (ie the tune and the lyrics – which in and of themselves can be owned by different parties), which is owned by the composers/publishers of a song, and copyright in the sound recording ie the recorded performance of a particular artist performing the song, which is typically owned by record companies. When a party wishes to use a recorded song eg a track which is commercially released, it needs to obtain permission from the owners of both of the copyright works, in order to be fully authorised to use the song.

The Australasian Performing Rights Association and the Australasian Mechanical Copyright Owners Society (APRA AMCOS) represents the rights of composers/publishers of musical works, and collects and distributes licence fees for the public performance and communication (including broadcast) of its members’ musical works. The performance and communication rights in sound recordings are administered by another, separate collecting society – the Phonographic Performance Company of Australia (PPCA). The PPCA performs functions similar to those of APRA AMCOS, and represents the owners of copyright in sound recordings (typically record labels). Licences can also be obtained directly from copyright owners but for mainstream businesses, obtaining the blanket licences offered by the collecting societies is the most efficient and effective way to comply with copyright licensing obligations.

Whenever a party obtains a blanket licence from APRA, for example to play background music, or songs as music on hold, it is generally required to also obtained an equivalent licence from the PPCA, if it wishes to use existing recordings of musical compositions ie commercially released versions of the works. Both APRA AMCOS and the PPCA offer a range of blanket licences, including licences to allow the use of sound recordings and music videos in the workplace, and as part of commercial businesses.

The case of PPCA v Hairy Little Sista Pty Ltd¹  related to two unlicensed restaurants and bars in Melbourne – one called Hairy Little Sista, and the second (which closed in 2017, with its operating entity deregistered) called Hairy Canary. Both venues played recorded music and were operational since at least August 2012. Since that date, the PPCA had attempted to negotiate with the operating entities and Ms Becker, their sole director and shareholder, regarding appropriate licences for the venues. An application for a licence was submitted in February 2014 by Ms Becker, but negotiations stalled and despite communications from the PPCA, the venues remained unlicensed but continued to play copyright protected recordings. The Court found that the respondents (who did not appear before the Court and only intermittently engaged with PPCA in the 4 year period prior to proceedings being commenced) acted either ‘in a flagrant disregard of copyright, or at least…turned a blind eye or put their “heads in the sand”.²

The PPCA was successful in its request for a declaration of infringement, a permanent injunction and a damages award equivalent to the amount of lost licence fees (a total of approximately $35,530, plus interest). PPCA had sent 20 letters and 18 emails regarding the need for the respondents to be licensed, contacted Ms Becker by telephone over 40 times, and had many conversations with her regarding the need to obtain a licence. In these circumstances, and in light of the concerns of the Court regarding the respondent’s failure to engage with the PPCA and lack of respect of copyright of the relevant owners, the Court awarded additional damages in the sum of $150,000. The respondents were also ordered to pay the PPCA’s costs (a further $8560). In total, therefore, the financial penalties imposed amounted to almost $200,0000.

The Hairy Little Sista case is obviously an extreme example, but it does highlight the significant financial penalties that can be applied if businesses ignore their copyright licensing obligations.

For further information on your businesses copyright licensing obligations or assistance with obtaining the necessary licences, please contact a member of our Intellectual Property team.

This article was written by Luke Dale, Partner, and Niomi Abeywardena, Special Counsel.

¹ [2018] FCCA 2794.
² Ibid at [23].