Australian current business law

A decision handed down in July 2007 by the Australian Copyright Tribunal was welcomed by the Phonographic Performance Company of Australia (PPCA).

The Tribunal approved an application by the PPCA for an increase in music licence fees paid to artists and record labels by dedicated nightclub venues and commercially organised dance parties.

In the first comprehensive review of this tariff ever undertaken by the Copyright Tribunal, the Tribunal lifted rates for licensed sound recordings played in nightclubs from 7 cents per person to AU$1.05 per person. The dance party rate rose from 20 cents to AU$3.07 cents per person.

"The object of the tribunal in approving the proposed scheme is to fix upon a licence fee that can be regarded, as nearly as it is possible to estimate, on the basis of the evidence …as the fair market price for the privilege of playing the recorded music in respect of which (PPCA) is able to grant a licence. If it be the fact that the market rate is 30 times the rate that has hitherto been charged, that is no reason why it should not now charge that rate.”

The move unsurprisingly caused outrage amongst nightclub and other music venue owners, some of whom warned that they would need to increase the amounts that they charge club patrons in order to absorb the increase.

In February 2007, following an agreement reached the previous between the US Patent and Trademark Office (USPTO) and IP Australia, a project under which IP Australia provides search and examination services on international patent applications filed with the USPTO under provisions of the Patent Cooperation Treaty (PCT) would be extended from March 1.

This agreement is a continuation of the project launched between the two offices in 2005.

"Cooperation on PCT search and examination work is part of the USPTO's ongoing efforts to improve examination efficiency and quality, while reducing the growing backlog of US national patent applications waiting to be examined. USPTO found that the quality and accuracy of the work done by IP Australia during phase one warrants extending the project and increasing the number of applications it processes."

IP Australia's Director General Ian Heath explained that IP Australia was pleased to sign up to a new phase of the project, announcing that:

"Participation in this project is a significant opportunity for IP Australia to move closer to its vision of being an office of choice and for enhancing its international reputation. It represents a further step towards achieving the goal of reducing re-work between offices and making mutual exploitation of work a reality for the ultimate benefit of Australian innovators and the IP system as a whole."

It emerged in November, 2006, that IP Australia, in conjunction with the country's Foreign Affairs and Tourism Departments, and the Attorney General's office, will in January 2007 co-host the 'Trading Ideas Symposium', under the auspices of the Australia-Pacific Economic Cooperation (APEC) 2007 forum.

The Symposium, to be held between January 28-30 in Sydney, aims to provide assistance and information to patent and trade mark attorneys, IP lawyers and in-house legal counsel, businesses seeking to capialize on their IP at home or overseas, R&D managers, government policy makers and competition regulators, and academics working in the field.

Keynote speakers will include: Dr Francis Gurry, Deputy Director of the World Intellectual Property Organization (WIPO), Alison Brimelow, President Elect of the European Patent Office, and Jon Dudas, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

Speaking with regard to the forthcoming event, Minister for Industry, Tourism and Resources, Ian MacFarlane announced that:

"The symposium, which will also be the key IP event in support of APEC Australia 2007, is a collaborative effort between the major Australian government departments and agencies responsible for IP in Australia."

"The program will highlight emerging IP issues, new policy direction, business case studies and issues for IP professions. In addition, it will provide a forum to explore future IP directions in the Region."

"The prosperity of our region depends on the creation of an innovative environment for business. The Australian Government recognises the value of IP as a cornerstone for future growth in the global knowledge based economy for both developing and developed economies. We wholeheartedly support efforts to develop a strong and effective intellectual property rights system in the Asia Pacific."

The Trade Marks Amendment Bill 2006 was passed in Australia's Parliament in October, 2006, making a number of incremental improvements to the Trade Marks Act 1995 that will strengthen the Trade Marks system and provide greater certainty for Australians and Australian business.

The improvements to the Trade Marks Act came about through a review conducted by IP Australia, the Australian Government agency responsible for administering the patents, trade marks, designs and plant breeder’s rights systems. The review found that the trade marks system was working effectively, but there were some changes that could be made to enhance the system.

The changes made by the Bill will improve the trade marks system in a number of ways. Key amendments included:

Parliamentary Secretary to the Minister for Industry, Tourism and Resources, Bob Baldwin last week described trade marks as very important resources for business.

“A registered trade mark represents a valuable business asset that can help to establish a strong and competitive market position," he observed.

“The Trade Marks Act 1995 has been in force for ten years and strengthening of the trade mark system will increase consumer confidence that they are buying genuine goods and services with the quality expected from the brand or mark," Mr Baldwin concluded.

Australia's Parliamentary Secretary to the Minister for Industry, Tourism and Resources, Bob Baldwin revealed in September, 2006, that a review of Australia's innovation patent had found that the system meets its objectives and that changes are not warranted at this time.

The review was conducted by IP Australia, the government agency responsible for administering the patent system, with assistance from the Intellectual Property Research Institute of Australia (IPRIA).

The innovation patent is predominantly used by Australian individuals and SMEs for less-knowledge intensive innovations such as consumer goods, and at nearly double the rate of the previous petty patent system.

“The Review of the Innovation Patent has found the system successfully encourages SMEs to develop incremental inventions and market them in Australia. By providing a second tier patent, the Government is ensuring that the intellectual property system continues to be responsive to the needs of businesses operating in fast moving, highly competitive markets by providing the option of shorter term, more flexible and affordable protection,” Mr Baldwin announced.

However, inadequate knowledge of the innovation patent was identified by the review as a key barrier to further improving public usage of the system. To address this, IP Australia is planning to undertake further public awareness activities for the innovation patent.

The review also found some businesses are using the system as interim protection for higher-level inventions such as chemicals and medical equipment, and recommended that this trend be monitored to ensure the innovation patent system is being used as intended.

The innovation patent was introduced in 2001 as part of the Government’s Backing Australia’s Ability initiative, and replaced the petty patent system. The innovation patent system was intended to stimulate lower level innovation by providing quick, inexpensive intellectual property rights, with a lower inventive requirement than a standard patent.

The Australian Domain Name Administrator (auDA) warned in August, 2006, that it had become aware of a scam involving fraudulent offers to register domain names.

According to auDA, Domains Australia Pty Ltd has sent letters and/or faxes to some domain name registrants offering to arrange registration of the net.au equivalent of the registrant's com.au domain name for $225.

The letter is headed ‘DOMAIN NAME AVAILABLE’ and some versions of it offer a free MP3 player with each registration. However, auDA has received numerous complaints which indicate that despite the net.au name being paid for, it is not being registered and that registrants are not receiving the ‘free’ MP3 player.

Based on the complaints received, the registrar expressed concern that the letters may mislead people into believing that they are renewing their existing com.au domain name when in fact they are purchasing a new net.au name.

In a statement, it announced that: "Further, consumers should be aware that $225 for a net.au domain name is significantly higher than prices charged by auDA accredited registrars and their resellers."

"Domains Australia Pty Ltd is a company controlled by Blair Rafferty, the brother of Chesley Rafferty. It is NOT an auDA accredited registrar nor is it a reseller of an auDA accredited registrar."

auDA has previously successfully taken legal action against Chesley Rafferty and companies controlled by him under the Trade Practices Act.

It emerged in August, 2006, that the major record companies have reached a global out-of-court settlement of international litigation against the operators of the Kazaa peer-to-peer network.

The settlement, announced by the trade organizations representing the international and US recording industries (IFPI and RIAA), applies to Kazaa's operations worldwide and concluded the ongoing legal proceedings brought by the record companies against the service's operators in Australia and the United States.

Under the terms of the settlement, Kazaa agreed to pay $100 million in compensation to the record companies that took the legal action to stop copyright infringement on the Kazaa network. Kazaa will also introduce filtering technologies ensuring that its users can no longer distribute copyright-infringing files.

"Kazaa was an international engine of copyright theft which damaged the whole music sector and hampered our industry's efforts to grow a legitimate digital business. It has paid a heavy price for its past activities. At the same time Kazaa will now be making a transition to a legal model and converting a powerful distribution technology to legitimate use."

"This is the best possible outcome for the music industry and consumers. Our industry will have a new business partner and consumers will experience new ways of enjoying music online, with more choice. This is a win-win scenario."

The settlement followed a landmark ruling in the Federal Court of Australia in 2005 which found the Kazaa operators guilty of authorising widespread copyright infringement, and litigation in the US by record companies, music publishers and motion picture studios against Kazaa, Grokster and Streamcast for copyright infringement.

The case against Grokster and Streamcast ultimately reached the US Supreme Court, which in June 2005 unanimously ruled that individuals or companies that promote copyright theft by users of their service can be held responsible. Grokster settled the case with the record labels and motion picture studios in November, 2005.

Under copyright law changes unveiled in June, 2006, Australian television viewers will now be able to legally record programs for later viewing (known as time-shifting), or for viewing by others, within certain limits.

The expansion of the 'fair use' provisions, described by Attorney General Philip Ruddock as "commonsense amendments", also legalises the transfer of copyrighted material between formats, or 'format-shifting'. However, this will not apply to DVDs.

In addition, new, tougher measures have been introduced for cases of copyright infringement.

According to an AAP report on the changes, Mr Ruddock observed that: "Copyright is important and should be respected. That is why the government is updating our laws to keep pace with technology."

The Australian Parliament in October, 2006, passed media laws that will allow the emergence of a range of new services for Australian consumers, and will safeguard competition in the sector, Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, asserted.

“By next year, a range of new services including free-to-air, in-home, digital only channels or even perhaps ‘snack’ television – small segments of TV content delivered over a mobile device much like a mobile phone could be available,” Senator Coonan said.

She then went on to unveil the details of safeguards that have been put in place to protect diversity and local content.

“Media mergers will only be able to take place subject to there remaining five independent media groups in metropolitan markets and four in regional markets."

“Companies will also only be able to own two of the three regulated media platforms – commercial radio, commercial television and associated newspapers. The Australian Communications and Media Authority will enforce the diversity tests and, of course, all mergers will be subject to the approval of the Australian Competition and Consumer Commission," she explained.

Although Parliament has passed the legislation to allow a relaxation of the current cross media and foreign ownership restrictions, the Government has not yet announced when these reforms will come into effect.

“The Government will consider a proclamation date for the new laws and is keen to ensure that any opportunities for new investment in the media industry are accompanied by the potential for new services for Australian consumers,” Senator Coonan concluded.

The Australian Communications and Media Authority last week welcomed the decision of Justice Nicholson in the Federal Court in Perth concerning the contraventions of the Spam Act 2003 (Spam Act) by Clarity1 Pty Ltd of Perth and Wayne Mansfield, its managing director.

ACMA’s prosecution of Clarity1 is especially significant, as it represents the first prosecution under the Spam Act.

Among other matters, ACMA submitted to the Federal Court that in the twelve months after the Spam Act commenced in April 2004, Clarity1 Pty Ltd and Mr Mansfield sent out at least 56 million commercial emails with most of the messages being unsolicited and in breach of the Spam Act.

Justice Nicholson on Thursday rejected the company’s defence that the recipients of emails had consented to receive them. He further rejected the defence that the company could use harvested lists acquired before the Spam Act commenced to send Spam emails at any time.

"The fact that address-harvesting may have occurred at a time when no such prohibition was in the law, does not prevent the application of the provision in its term from the date it came into force," he observed.

"This has been an important test case for the Spam Act. Justice Nicholson’s findings should give Australians confidence in the effectiveness of this important legislation."

He continued: "The receipt of spam imposes significant cost and inconvenience on individuals and businesses by disrupting email delivery, clogging up computer systems, reducing productivity, wasting time, irritating users and raising the cost of internet access fees."

"This case provides a strong indication to Australian spammers that their activities will be vigorously pursued by ACMA."

The Federal Court has advised that the determination of penalties will be made at a later date.

In March, 2006, Australia's Minister for Communications, Information Technology and the Arts, Senator Helen Coonan, has released a discussion paper on reform options for Australia's media industry.

“Traditional media services are being challenged by new digital technologies and this is resulting in the emergence of new players, new content, new services and new platforms,” she explained, continuing:

“For the consumer, this means an ever-increasing number of new sources of information and entertainment. For the media sector, while this evolution poses challenges as audiences are attracted away from traditional media sources, it also presents significant opportunities to embrace new ways of doing business."

“For the Government, the impact of digital technologies means the current regulatory settings, which are largely designed for an analogue world, risk becoming outdated."

“In the end any media reforms must be about providing a richer and more diverse media environment for Australian consumers and that is why their views are important. So today I am releasing a discussion paper outlining options for a strategic framework for proposed reforms to the media industry in Australia.

The Government is seeking comment on options outlined in the paper, which cover areas such as the expedition of digital conversion, media ownership and control, and the impact on broadcasters of an analogue switchover, by 18 April 2006.

In February 2007, the Australian Senate passed a bill that will enhance cooperation between the national financial markets regulator, the Australian Securities and Investments Commission (ASIC), and foreign regulatory agencies.

"This Bill is an important milestone in furthering international cooperation between regulators,” explained Chris Pearce, Parliamentary Secretary. "It will empower the Australian Securities and Investments Commission, with the consent of the Minister, to enter into cooperative audit arrangements with foreign regulatory bodies."

As a result of the Australian Securities and Investments Amendment (Audit Inspection) Bill 2006, ASIC has been able to enter into a cooperative audit arrangement with the US Public Company Accounting Oversight Board (PCAOB).

The bill will also enhance ASIC’s domestic and international audit inspection powers. "These measures are also designed to reduce compliance costs and they will clarify the scope of ASIC’s existing power to review audit firms,” Pearce stated.

The Bill additionally contains a technical amendment to a transitional provision relating to auditing standards made by the professional accounting bodies, bringing the period of immunity against criminal liability applying to the standards into line with the extended life of the standards.

"The legislation has benefited from constructive input from stakeholders, including the major audit firms, during the consultative process,” Pearce announced. "I would like to thank them for their valuable contribution to shaping the legislation.”

"I am also pleased that the extensive consultative process has ensured that all key stakeholders support the measures in the Bill," he noted.

The Australian Securities and Investments Commission (ASIC) acted in October, 2005, to stop a number of investment clubs based in the Republic of Vanuatu from operating in Australia.

ASIC announced that it had also obtained orders banning the directors of the group from providing financial product advice, dealing in a financial product or operating a registered managed investment scheme in the country. The orders were made, by consent, in the Federal Court against Gramax Investment Club Limited (Gramax), Biri Limited (Biri), ClubInvest Limited (ClubInvest), all incorporated in the Republic of Vanuatu, and their directors, Mr Graham Laughlin, Mr Philip Northam and Mr Allan Veivers.

ASIC commenced proceedings due to concerns that Gramax, Biri and ClubInvest were offering financial services to Australian investors without holding an Australian Financial Services Licence (AFSL) or being appropriately authorised by an AFSL holder. In particular, ASIC was concerned that in promoting the investment club to Australian investors, Gramax and Biri were operating and promoting a managed investment scheme, and that ClubInvest was offering securities without a current disclosure document, in breach of the requirements of the Corporations Act.

The Court agreed with ASIC’s claim that the companies had contravened various sections of the Corporations Act and ASIC Act in relation to their operation of the investment clubs. The Court also made banning orders against the directors, restraining them from either directly or indirectly providing financial product advice, dealing in a financial product or operating a registered scheme.

ASIC’s investigations found that investors in the schemes were recruited from referrals from other Club members attending club meetings in Australia and via the clubs' websites. Over $15 million was raised collectively by the investment clubs from more than 500 Australian investors.

The investment clubs promoted average annual returns of 28.5 per cent to 31 per cent. The Gramax and ClubInvest websites also promoted a referral system whereby existing investors who referred new investors received a benefit for the referral.

In response to the action, Gramax, Biri and ClubInvest have made undertakings to both ASIC and the Court to: notify all investors of the outcome of the proceedings within 14 days; offer full redemption of an investment to any investor within 60 days of a request; and no longer pay referral fees with respect to any investor referred to Gramax, Biri or Clubinvest on or after 29 September 2005.

Commenting on the action, ASIC Deputy Executive Director of Enforcement, Mr Allen Turton, urged Australian investors to ensure that they deal only with investment funds licensed in Australia, warning that they stand little chance of recompense once their money is moved offshore.

"ASIC will take action against individuals or companies that seek to operate within Australia without holding the appropriate license or authorisation," stated Mr Turton.

"ASIC recommends that investors check that they are dealing with an entity that is licensed in Australia, as there may be limited prospects to get your money back once the funds are sent offshore," he added.

In June, 2005, ASIC warned internet users to beware of 'phishing', citing a recent doubling in reports to ASIC concerning this financial scam.

ASIC's Commissioner, Professor Berna Collier explained that complainants had reported receiving emails which appeared to be from well-known Australian and international banks or financial institutions.

"These emails, with titles like 'Urgent Security Notice', ask for information including pin numbers, card expiry dates or internet banking registration numbers and passwords. The emails often give plausible explanations for why this information is needed, such as 'to conduct security upgrades', 'investigate irregularities' or 'arrange payment of bills due'', Professor Collier announced, continuing:

"In some instances, the email will include links to real websites so that you can access your account, it may use copies of the branding of a real bank or provide a contact telephone number so that customers may 'verify' the request for information. All of these tricks combine to set an elaborate trap for unsuspecting consumers."

"A bank will never ask you to confirm your internet banking password, especially in an email', she concluded.

According to a report published in The Lawyer.com in October, 2004, lawyers in New Zealand are facing increasing competition in the domestic corporate market from their Australian counterparts, and from in-house lawyers.

In order to counter the phenomenon, according to the news service, a number of boutique firms specialising in trans-Tasman work have recently been established in New Zealand.

Laurie Mayne, senior partner at one such boutique firm, Mayne Wetherall, confirmed the situation, explaining that: "The legal market in New Zealand has become increasingly provincialised, with the decision-making moving from Auckland and Wellington to Sydney. New Zealand has evolved into a branch office economy - and with six heavily lawyered, 40-plus-partner firms, there's a lot of competition."

He went on to add: "There's been more than a drift of work across the Tasman - all of New Zealand's banks are now Australian-owned, with the last one sold to ANZ last year, and many corporations have head offices offshore."

Company Law

In February 2007, Australian Treasurer and Minister for Small Business and Tourism, Peter Costello, released draft legislation containing proposals to reduce tax compliance burdens for the country's small businesses.

The proposals aimed to standardise the eligibility thresholds for small business tax concessions from 1 July 2007. Previously, separate eligibility tests existed for GST, the Simplified Tax System, capital gains tax (CGT), fringe benefits tax (FBT) and pay-as-you-go (PAYG) small business concessions.

Under the proposals, any business with annual turnover of less than A$2 million would be able to access these concessions, subject to any additional criteria set out in the particular concessions.

Small businesses meeting the $2 million annual turnover test would not need to make any further decisions to enter into the new arrangements, Costello explained, nor would they be obliged to adopt any concessions not suited to their requirements. Any business meeting the new small business definition would be able to choose those concessions that meet its business needs.

According to the Treasurer, a single definition of small business was expected to result in reduced compliance costs for some 2 million Australian small businesses, or 96% of all Australian businesses, effectively giving small firms a A$150 million tax cut.

In December, 2006, Peter Costello announced a new initiative that he claimed would provide a significant and sustained reduction in business to government reporting burden.

The Standard Business Reporting project builds upon the business measures announced by the Commonwealth in response to the Banks Report, to increase the scope for innovation, enhance entrepreneurial drive and increase productivity.

Reporting requirements from the various levels of government impose a significant burden on Australian business. The recent Report of the Taskforce on Reducing Regulatory Burdens on Business considered that getting rid of unnecessary regulatory compliance costs could save business billions of dollars per annum.

Standard Business Reporting is a whole of government programme to reduce reporting burdens for business through eliminating unnecessary or duplicated reporting and improving the interface between businesses and government agencies.

Costello said that the participation of state and local governments, and close consultation with the business community will be crucial to achieving the maximum benefits for Australian businesses.

Standard Business Reporting will pursue three broad opportunities for reducing business reporting burden: reducing the number of different agencies to which businesses have to report directly the same or similar information; reducing the number of data elements that businesses report to government through standardising and harmonising data definitions and eliminating duplication; and providing options for increased automation of business reporting, including greater pre-population of forms.

"The full benefits of Standard Business Reporting rely on all three opportunities being pursued concurrently," the Treasurer said.

"This will involve a single broad coordination and support authority which will manage business to government reporting holistically, over a sustained period," he added.

In September, 2006, the Australian government released the draft Corporations Amendment (NZ Closer Economic Relations) Bill 2006 for public scrutiny.

According to Chris Pearce, Parliamentary Secretary, the initiative builds on the commitment by both the Australian and New Zealand Governments to remove unnecessary regulation of trans-Tasman business and promote greater coordination of business law between the two countries.

“When enacted, the provisions will allow the offer of securities and managed investment interests to be made in either country with the same offer documents, therefore reducing duplication and cost which inevitably get passed on to consumers," Pearce explained.

"The reduced filing requirements provisions of the draft bill are intended to exempt New Zealand companies operating in Australia from lodging the same information with ASIC that the companies have already lodged with the New Zealand Companies Office,” he added.

The Australian Treasury is inviting comments on the new legislation in a consultation that closes on October 13, 2006. The draft bill and commentary can be viewed on the Treasury's website.

Compliance Law

In July 2007, Chris Pearce, Parliamentary Secretary to the Treasurer consented to the Australian Securities and Investments Commission (ASIC) entering into a cooperative audit oversight arrangement with the US Public Company Accounting Oversight Board (PCAOB).

“Closer international cooperation by ASIC with overseas regulators is in Australia’s national interest because of the globalisation of capital markets,” Mr Pearce explained.

The Government facilitated the proposed arrangement between ASIC and the PCAOB with the enactment earlier in the year of the Australian Securities and Investments Commission Amendment (Audit Inspection) Act 2007. This Act provided a legislative framework to empower ASIC, with the consent of the Minister, to enter into cooperative audit oversight arrangements with foreign regulators.

“The proposed joint audit inspection process between ASIC and the PCAOB will reduce red tape here in Australia and provide significant cost savings for Australian audit firms registered with the PCAOB. The safeguards built into the legislation and the cooperative arrangement will ensure we get the right balance between ASIC’s statutory responsibilities, and protecting the interests of clients and their audit firms,” stated Mr Pearce.

The first joint inspections by ASIC and the PCAOB were expected to begin later in 2007.

In May 2007, the Australian government announced a package of improvements to the income tax law affecting consolidated groups and multiple entry consolidated groups (MEC groups). The improvements aim to ensure the law operates effectively and to reduce compliance costs for consolidated groups and MEC groups.

Under the consolidation regime, which was introduced from 1 July 2002, wholly-owned groups are taxed as a single entity. Over time, taxpayers and the Australian Taxation Office have identified certain aspects of the consolidation regime that are producing inequitable outcomes or imposing excessive compliance costs.

The package clarifies the application of the income tax law for consolidated groups and MEC groups in two ways.

First, it modifies the consolidation tax cost setting rules, which set the costs of a joining entity’s assets for income tax purposes, to ensure that they operate effectively.

Second, it clarifies interactions between the consolidation provisions and other parts of the income tax law, including interactions with the capital gains tax regime and the uniform capital allowances system.

Some of the changes apply from the commencement of the consolidation regime because they clarify the operation of the law and ensure that it operates effectively. Other changes apply prospectively.

In September, 2006, the Dubai Financial Services Authority (DFSA) entered into a Memorandum of Understanding (MoU) with the Australian Securities & Investments Commission (ASIC).

The MoU was signed in Sydney by David Knott, Chief Executive of the DFSA, and Jeffrey Lucy, Chairman of ASIC.

The signing coincided with a visit to Australia by a delegation from the Dubai International Financial Centre (DIFC), led by the Governor of the DIFC, Dr. Omar bin Sulaiman.

During the signing, Knott commented: “Australia has a well developed capital market and an internationally respected regulatory framework. The strength of the Australian system was demonstrated during the Asian financial crisis in the late 1990s from which Australia emerged largely unaffected."

“Reforms to the Australian regulatory system in the early and mid-1990s, creating a nationally integrated capital markets and regulatory structure, have underpinned Australia’s long period of sustained economic performance.”

Knott added: “As the national companies and securities regulator ASIC plays a key role both within Australia and internationally. A significant part of the DFSA’s securities regulation is based on the ASIC model, adding special significance to this MoU."

“As a former Chairman of ASIC, I am personally delighted to be signing the MoU today on behalf of the DFSA with my friend and former colleague Jeffrey Lucy.”

The signing of the MoU put in place arrangements for cooperation and information sharing between the two regulators. It recognizes that both regulators rely on the quality of regulatory standards administered in the other’s jurisdiction.