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Business News (more headlines) 03-28-2012

High Court Upholds 1% Cap On Broadcast Royalties For Sound Recordings

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The High Court has handed down its decision in Phonographic Performance Company of Australia Limited (PPCA) & Ors v Commonwealth of Australia & Ors.

The case concerns the cap in the Copyright Act 1968 for royalties payable for the radio broadcast of sound recordings. While price caps are a common form of economic regulation, the caps in the Copyright Act are unusual in that they are not underpinned by any discernable economic formula. For example, the cap for commercial radio broadcasts is 1% of the gross earnings of the broadcaster (section 152(8)(b)).

The Howard Government had announced its intention to lift the cap on broadcast royalties for sound recordings as part of its 2006 amendments to the Copyright Act. However, this change did not appear in the final draft of amendments.

PPCA, the copyright collecting society representing owners of copyright in sound recordings, brought the matter to the High Court. They argued that the inclusion of the cap in the 1968 Act amounted to an acquisition of the property of the owners of copyright in sound recordings other than on "just terms" and was therefore in contravention of section 51 (xxxi) of the Constitution. The Defendants (the Commonwealth, Commercial Radio Australia and the ABC) argued that there was no acquisition of property given that the legislation in force prior to the 1968 Act did not create a broadcast right. They further argued that even if there was an acquisition of property, it was consistent with the kind of adjustment envisaged by s 51(xxxi) of the Constitution.

The High Court has today confirmed the constitutional validity of the cap.

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