COPYRIGHT TRIBUNAL OF AUSTRALIA

Application by Isentia Pty Limited [2020] ACopyT 1

COMMONWEALTH OF AUSTRALIA

Copyright Act 1968

THE TRIBUNAL DIRECTS THAT:

1.    The amended application filed on 17 January 2020 is dismissed.

2.    The costs of and incidental to the application are reserved for later determination.

3.    The request of the applicant and other applicants who have filed applications under s 157(3) of the Copyright Act 1968 (Cth) (the “Act”), Meltwater Australia Pty Ltd (“Meltwater”) and Streem Pty Limited (“Streem”) to refer particular questions to the Federal Court of Australia for a determination is refused.

4.    The five questions referred to at [202] of the decision published today are set aside for determination separately from other questions.

5.    The representatives for Isentia Pty Limited, Meltwater and Streem are directed to advise the Associate to the President of dates in May when counsel and solicitors will be available to participate in a hearing of matters in relation to the five questions referred to in Direction 4.

6.    The costs of and incidental to the request to refer the five questions to the Federal Court of Australia are reserved for later determination.

7.    The parties are directed to conduct discussions so as to propose directions for the future conduct of the applications with a view to submitting proposed directions to the Tribunal by the end of April but preferably by 4.00pm on Monday, 27 April 2020.

REASONS FOR DETERMINATION

GREENWOOD J (PRESIDENT):

Background

1    These proceedings are most immediately concerned with an amended application for interim orders under s 160 of the Copyright Act 1968 (Cth) (the “Act”).

2    The applicant, Isentia Pty Limited (“Isentia”), seeks an order with effect from 17 January 2020 (the date of filing of the application) until further order that the per-clip rate payable to Copyright Agency Limited (“CA”) in accordance with an Interim Licence (described as Press Clipping Service Licence Newspapers and Magazine: Copying & Communication Rights) ordered by the Tribunal on 23 April 2019, be varied to the amount of the per-clip rate payable by Meltwater Australia Pty Ltd (“Meltwater”) to CA pursuant to orders made by the Tribunal on 23 May 2018 (in proceedings CT2 of 2017) concerning an interim licence in favour of Meltwater.

3    The Isentia per-clip rate ordered on 23 April 2019 is the amount in the Confidential Schedule (“CS”) at CS1. The Meltwater per-clip rate is the amount at CS2.

4    Isentia also seeks an order that the Downstream Licence Fee payable to CA in the Isentia Interim Licence (otherwise known as the Scraping Licence) ordered by the Tribunal on 23 April 2019 be varied to the amount per annum at CS3, payable pro rata per quarter.

5    These proceedings are also concerned with an issue which has emerged between the parties to the proceeding and which also engages Meltwater and another interim licensee, Streem Pty Limited (“Streem”). The further issue is the question of whether a matter ought to be referred to the Full Court of the Federal Court for determination of a question of law concerning the power of the Tribunal to make orders of a particular kind as against particular entities. This question is a matter of considerable practical and financial concern to each applicant and, of course, the question is a matter of concern to CA, CopyCo Pty Ltd (“CopyCo”), publisher members of CopyCo and non-member publishers of CopyCo. I will return to that matter later in these reasons.

6    There is a further issue alive between Isentia, Meltwater and Streem, on the one hand, and CA, on the other hand, concerning procedural orders and the completion of necessary steps in the march towards a hearing of each of the principal proceedings commenced by Isentia, Meltwater and Streem all to be heard together, presently set down for October this year. I will also return to that matter later in these reasons.

7    Isentia’s amended application was heard on 21 February 2020 with a further related matter reviewed and heard on 27 February 2020. The Tribunal had hoped to reach a decision on the amended application during March. However, due to the intervention of a number of other urgent matters requiring decision, and the emergence of the present circumstances confronting the Tribunal and the Court in the disposition of matters, it has not been possible to deal with the application and related matters until now. Having regard to the extent of the affidavit material relied upon by the parties and the work and cost involved in preparing that material, it is necessary to examine the material in some detail.

Isentia’s amended application

8    The starting point in relation to the amended application is the reasons of the Tribunal of 16 November 2018: Application by Isentia Pty Limited [2018] ACopyT 4. It should be noted that as a result of the decision and reasons published on 16 November 2018, the parties engaged in negotiations in relation to all aspects of those reasons so as to present orders to the Tribunal to be made arising out of those discussions. Those negotiations did not come to fruition until April 2019 for a number of reasons, resulting in the orders of 23 April 2019.

9    It is not necessary to set out the terms of the orders of 23 April 2019 in these reasons. However, these reasons should be read together with the orders of 23 April 2019 and Attachments A and B to those orders, together with the reasons of the Tribunal published on 16 November 2018. All of the observations in the reasons published on 16 November 2018 remain important both contextually and in an operative sense. I do not propose to set out in these reasons much of the history described in those reasons. However, the reasons published on 16 November 2018 ought to be read closely as they explain the context in which an issue of pricing parity emerged between Isentia and CA, having regard to the orders made in the interim application by Meltwater. They explain the evolution of the notion emerging from CA that the preferred position of CA is that all entities, engaged in the market for the provision of media intelligence services, ought to be put on a common footing (in terms of the final preferred position) through the adoption of a common industry standard licence. The reasons also explain the differential circumstances which historically resulted in individual transactional licences being reached between CA and Isentia, Meltwater and Streem.

10    In the earlier reasons, the Tribunal set out an analysis of the evidence of the parties and discussed the competing contentions about the question of whether a differential per-clip rate payable to CA, of the kind then in issue, had the effect of giving rise to distortions in rivalry in the market for the provision of services by, in particular, Isentia and Meltwater, to clients of those entities, based upon sub-licences to exercise rights conferred upon those entities by CA. At [89], the Tribunal said this:

89    I accept that having regard to all of the affidavits there is at least a serious question as between the parties as to whether the different Licence Fee provisions concerning the Isentia current licence and the Meltwater current arrangements give rise to distortions in rivalry in the market for the provision of each entity’s services. The extensive loss of the substantial clients set out in the Schedule in the material (with other references in the text of the affidavits) from Isentia to, in the main, Meltwater, is at least consistent with an advantage that Meltwater enjoys in the Licence Fee it pays for the grant of the rights it enjoys.

11    One of the contentions advanced by CA was that there were material differences in the scope of the rights granted by CA to Isentia, on the one hand, and Meltwater, on the other, which explained a difference in the per-clip rate in each licence arrangement. Isentia contended that these material differences relied upon by CA were “distinctions without a difference” and to the extent that these differences gave rise to different treatment in the per-clip rate, Isentia took the position, for the purposes of the interim licence, that it was willing to be put on precisely the same footing as Meltwater in terms of the scope of rights and thus, ought to enjoy the same per-clip rate as Meltwater. All of this was put forward on the footing that it provided an interim answer to the prejudice Isentia was suffering pending the determination of the principal proceeding, by reason of the pricing disparity said to be operating in the market.

12    As to these matters, the Tribunal said this at [98] to [102] of the earlier reasons:

98    Isentia also says that because it regards the matters of contended “material differences” in the scope of the rights granted by CAL to Isentia and Meltwater emphasised by CAL, as “distinctions without a difference” or “de minimis” differences, it says that on an interim basis it is willing to accept precisely the same scope of rights enjoyed by Meltwater which would then address the so-called material differences and on that footing, or on those terms, Isentia ought to be paying the same licence fee as Meltwater, pending the determination of the principal application(s). Isentia says that this approach would then enable the contended distortions brought about by differences in the upstream copyright cost to be addressed if the so-called material differences are thought to be a principled basis for differences in the Licence Fee in each case.

99    As to the question of material differences, I accept that there are certainly textual differences in each relevant licence concerning the character of the rights granted to Isentia, on the one hand, and Meltwater, on the other hand, as described at [80] – [82] and [85] – [86] of these reasons. However, I am not satisfied that these textual differences make a significant practical working difference having regard to those things that Meltwater actually does in providing to clients its media intelligence services as compared with those things which Isentia does. In that regard, I note particularly Meltwater’s own statement of its activities in relation to the Licensed Works as set out in the Confidential Schedule and CAL’s response which does not seek to challenge the content of that statement of Meltwater’s activities. In fact, CAL seems to embrace those activities as a basis, no doubt, for arguing that Meltwater ought to be paying a substantial industry-wide licence fee.

100    I also accept that there seems to be no rational or principled basis for differential treatment in the licence fees, on an interim basis pending the determination of the principal applications, paid by Isentia and Meltwater for the exercise of the rights once it has accepted that the textual differences do not seem to be giving rise to a real difference in that which is offered by Isentia as compared with that which is offered by Meltwater at least in terms of exercising rights in relation to Licensed Works.

101    I also accept that Isentia has lost a number of significant clients to Meltwater and that the differential copyright cost is at least an element of substance in that outcome. Human experience of rivalry in markets is that once a client is lost to a rival, it is likely to take real time and effort to win back that client, if at all. This is another feature of prejudice. Some examples of the clients lost by Isentia to Meltwater and the grading or significance of those clients to Isentia is set out in the Confidential Schedule.

102    If the textual differences in each of the licence arrangements with Isentia and Meltwater as to the grant of rights are, in fact, material, it seems to me that those material differences can be smoothed out by establishing, on an interim basis, terms of a licence by CAL to Isentia on the same terms as the licence granted to Meltwater, as to the character of the rights granted to each licensee. Isentia says that it is willing to be put on the same footing as Meltwater as to that matter. Once a licence is granted to Isentia in respect of the same class of rights licensed to Meltwater, it would seem to follow that there ought to be a licence fee payable by Isentia, during the interim period, which reflects the same licence fee paid, in substance, by Meltwater.

13    At [103], the Tribunal notes the important debate about the manner in which the rights, the subject of the licence to Isentia (and each of Meltwater and Streem), are to be valued especially having regard to the changing nature of the industry.

14    At [104], the Tribunal notes that in seeking to address the prejudice contended for by Isentia, by reducing the then prevailing per-clip rate based on the 2016 Isentia Licence (being the amount at CS4) to a lesser amount, CA would also suffer prejudice in the interim by being deprived of the cash flows which would have been received referable to the rate at CS4. The Tribunal notes that the difference between the rate at CS4 and the Meltwater rate at CS2 was an amount at CS5.

15    At [105], the Tribunal said this:

105    In order to provide CAL with some relief from what would be the deprivation of the full difference [at CS5 of these reasons], the per clip licence fee to be paid by Isentia is to be the amount [at CS1 of these reasons]. A per clip rate at that amount goes some way at least towards smoothing out the differential rate as between Meltwater and Isentia and yet provides a continuing contribution to CAL’s cash flow deprivation that would occur if the per clip rate was merely the amount [at CS2].

[footnote omitted]

16    As to the role of the interim licence as established by the decision and reasons of 16 November 2018, the Tribunal said this at [109] and [110]:

109    The Tribunal proposes to establish an interim licence in favour of Isentia to apply for the months of December 2018 and January and February 2019 and then review the position with a view to establishing a further licence for a further period of three months for March, April and May 2019 and then, if necessary, for a further period thereafter until the determination of the principal applications. The hearing of the principal applications will need to be expedited so that final terms and conditions might be established. The parties ought to caucus about proposed directions for bringing the applications to a hearing as soon as is practicably possible.

110    The terms of the interim licence for December 2018 and January and February 2019 ought to include a provision to the effect that should the Tribunal establish terms and conditions of a licence which contain a higher rate of licence than that prevailing in the interim period, the higher rate of licence will be paid by Isentia as from 1 December 2018 and, correspondingly, should the Tribunal determine a lower rate of licence fee, Isentia would be entitled to recoup the difference between that paid and the lower rate.

17    Thus, it can be seen that the Tribunal had in mind that the interim licence established by the Tribunal would operate for the months of December 2018 and January and February 2019 with a review then taking place with a view to establishing a further licence for a period of three months for March, April and May 2019 and then further periods thereafter. In other words, it was anticipated that the matter would need to be kept under review to determine whether circumstances might have changed which would influence the question of whether any aspect of the interim licence ought to change. However, as already mentioned, the negotiations leading to the agreed orders did not come to fruition until 23 April 2019.

18    In the context of the remarks at [109] and, particularly, [110], the Tribunal also observed, as a matter of impression, the matter at [111] in these terms:

[111]    It seems, impressionistically at least, that it is unlikely that the Tribunal will determine a lower rate of Licence Fee than the interim Licence Fee.

19    Finally, the Tribunal noted that an interim licence was established in favour of Streem on 28 June 2018 and at [113] and [114], the Tribunal said this:

113    In the case of Streem, an interim licence was established as an exercise of power under s 160 of the Act by extending the pre-existing licence. In terms of the interim arrangements relating to Streem, the Tribunal regarded as very influential the circumstance that the parties had recently struck a bargain on two separate occasions in which Streem itself had elected to extend the licence on the terms of a particular bargain. In the case of Isentia, the 2016 Licence was struck in April 2016, that is, two and a half years ago.

114    The Tribunal also observed that a particular fee structure applicable in an interim arrangement might well operate differentially as between a mature business and a new entrant business. So far as that principle is concerned, it has no application here as Meltwater is not a new entrant business undertaking. It is a mature participant in the market and it has established a market share of about 30%.

20    Isentia says that since 23 April 2019, the prejudice which led to a reduction in the per-clip rate and other changes to the interim licence has accelerated across the period of the last 12 months.

21    The principal evidence relied upon by Isentia is the affidavit of Mr Sean Smith sworn on 18 December 2019. Mr Smith is the Chief Commercial Officer at Isentia. Since 24 November 2019, he has shared this role with Mr Horell as part of a handover of the role to Mr Horell. Mr Smith is able to speak to the primary matters said to support the continuing prejudice Isentia is experiencing. Mr Smith swore an affidavit in the proceeding on 17 July 2018. Mr Smith was the National Sales Director of Isentia from April 2012 to May 2013. He was then the Chief Executive, Media Intelligence, from June 2013 to February 2018 and the Chief Commercial Officer from March 2018 to 18 December 2019. Mr Smith explains that the different media intelligence plans offered by Isentia to clients range from a “basic light touch online service model” currently called “Essentials” through to strategic account management by a plan known as “Enterprise”. Each media intelligence plan provides the customer with different levels of access to a range of modules. The “Essentials” plan provides customers with a basic level of analysis while the “Enterprise” plan provides the highest level of analytical service. The media intelligence plan selected by the customer determines the threshold subscription fee charged by Isentia.

22    A second component of Isentia’s fee charged to the customer is based on the volume of content and data that a customer receives from Isentia. This, in turn, is based upon a number of data packages of different sizes offered by Isentia to customers. Mr Smith says that the “key input” in determining the price of the data package is the “cost of copyright which Isentia pays to the publishers of that content and data”. Mr Smith says that the copyright cost is used as the “starting cost base for each data package”. Isentia then adds, to that cost base, an additional charge based on a margin that Isentia considers to be “an acceptable margin”. The combination of the two determines the overall amount charged to the customer for the particular content and data package. For example, a customer might purchase a data package which includes material drawn from press publications, broadcast sources, online sources and social monitoring and within that data package there will be a particular maximum number of media items provided to the customer for a set price.

23    Mr Smith says that as discussed in his earlier affidavit, he has some understanding of the licensing arrangements as between CA and Meltwater and Streem. He says that he understands the position to be that the per-clip rate that Isentia is paying under the current interim arrangement remains higher than the per-clip rates paid by Meltwater and Streem. He says that “due to the higher price per clip” paid by Isentia under the current interim licence, as compared with the per-clip rate paid by Isentia’s competitors, the volume of clips which Isentia is able to offer to customers for a particular price, is “much lower than” the volume of clips a competitor on a lower per-clip rate could offer to a customer for the same price. Mr Smith says that immediately after the interim licence came into effect, Isentia used the new reduced per-clip rate to dictate the price of the content and data packs offered to customers. Mr Smith exhibits to his affidavit the adjusted rate card used to calculate the overall fee charged to a customer which sets out details of the functionalities currently offered to Isentia’s customers.

24    At Part D of his affidavit, Mr Smith addresses the topic of clients of Isentia lost to Meltwater and to Streem and other competitors during the period of Isentia’s current interim licence.

25    By way of introduction to a discussion of five particular customers, Mr Smith makes a number of overarching comments.

26    Mr Smith says that in circumstances where there is a lack of parity in the marketplace in the amount that businesses offering media monitoring services are paying to CA for a licence to copy and communicate works in which copyright subsists, competitors of Isentia with a more favourable fee invariably have an advantage during price negotiations with clients. He says that he has reviewed Isentia’s records and has caused to be created a list of all clients that Isentia has lost to either Meltwater or Streem since 1 December 2018. A copy of the list is Confidential Exhibit “SAS-2” to his affidavit. The list consists of the number of customers at CS6. The list identifies the number of clients lost to Streem (CS7) and the number of clients lost to Meltwater (CS8). The list also shows the value of the customer to Isentia in terms of the amount of billings to the customer in the last 12 months (1 December 2017 to 30 November 2018). It also shows, in respect of the customers who undertook a tender process, the initial offer made by Isentia and then the best offer made by Isentia to try and secure the customers’ business. It then shows the winning competitor bid accepted by the customer. As to the winning competitor bid, Mr Smith only has information as to that matter for a limited number of clients where a lost customer has reported the winning figure to him (or a colleague), or for certain government clients where the amount of the winning bid is publicly available.

27    Mr Smith says that “amongst the [CS6 number of] customers” in the list, there are a number of examples “where Isentia has not been able to take a competitive position in terms of its pricing due to the lack of parity in the market”, which must be taken to be a reference to a lack of parity in the price paid to CA by Isentia as compared with Meltwater, but also includes a reference to lack of parity in the price paid to CA by Streem as compared with Isentia and also Meltwater.

28    The first of the five lost customers is the customer at CS9.

29    Isentia has been providing media monitoring and daily briefing services including particular additional services to CS9 for over 15 years. Mr Smith says that Isentia has been receiving “positive feedback” from CS9 over that time and in Mr Smith’s opinion, Isentia’s services are held in high regard by CS9. He says that CS9 requires a premium level of media monitoring services, which he describes. He says that CS9 adopts broad search terms across a number of print, online and social media platforms which means that CS9 regularly receives a high volume of content and data primarily across social and traditional print media. He says that in September 2019, CS9 went to tender for its media monitoring and daily briefing services. He says that the revenue generated by Isentia from providing services to CS9 during the 12 months to 30 November 2018 constituted the amount at CS10.

30    Mr Smith says that in tendering for the provision of services to CS9, Isentia sought to offer greater value to the customer by including its “Insights service”, its service called “analytics features” and its service called “command centre”. It offered to embed an Isentia employee at CS9 and offered a price for the service at CS11. It revised its price to the amount at CS12. He says that at the CS12 price, Isentia was required to significantly “strip” its service offering to ensure that it did not suffer a net loss in the provision of the services. He says that the service offering did not then compete with the service offering of competitors in the market given CS9’s “need for a premium media monitoring service”.

31    Isentia was unsuccessful in its bid. In a debrief, Isentia was told that CS9 was impressed with the service offering of Isentia and that its presentation was the best that CS9 had seen throughout the tender process but that “in the end” price was a significant part of why CS9 chose to go elsewhere for the service. He says that Isentia was told that the fact that CS9 could obtain what they thought was the same offering for a significantly lower price “was a big determinative factor”. The contract was won by Streem for the amount at CS13.

32    The second of the five lost customers is the customer at CS14.

33    Mr Smith says that Isentia has been providing media monitoring and daily briefing services to CS14 for over 10 years. The services include addressing sensitive matters and providing a number of key persons in public positions with the service: CS15. Mr Smith says that a significant component of CS14’s overall fee is the cost associated with the volume of content it receives and although the subject matter will differ depending upon the issues of the day, the volume of content has been consistently high due to the broad nature of the brief given to Isentia particularly in relation to online and print content. In May 2019, CS14 put the acquisition of media monitoring services out to tender for a three year period. The revenue derived by Isentia from CS14 for the 12 months to 30 November 2018 is the amount at CS16. In the tender process, Isentia’s first offer was the amount at CS17 and its best offer was the amount at CS18. The contract was won by Streem for the amount at CS19. Isentia was advised by CS14 that the main reason that the contract was awarded to Streem was price.

34    The third of the five lost customers is CS20.

35    Mr Smith says that Isentia has had a relationship with CS20 for over 10 years. He says that Isentia has consistently received “positive feedback” from CS20 in relation to service provision. The revenue derived by Isentia from CS20 is the amount at CS21. In April 2019, Isentia, in the course of negotiations for a new contract, offered the price at CS22. After the orders made on 23 April 2019, the price offering was revised to the amount at CS23. The customer advised Isentia that it wanted to stay with Isentia but the bid prices were “too big to ignore” with the result that Isentia submitted a best and final offer of the amount at CS24, although the contract, if won at that price, would not be profitable. The contract was won by Streem for the amount at CS25. Isentia was advised by the customer that the decision was “completely based around price”.

36    The fourth of the five lost customers is CS26.

37    Mr Smith says that CS26 has been a customer of Isentia since 2008 and during that time, Isentia has provided media monitoring and daily briefing services to CS26. The customer receives a high volume of content and data due to its broad brief and the nature of its business. The revenue derived by Isentia from CS26 in the 12 months to 30 November 2018 is the amount at CS27. In early 2019, CS26 undertook a tender process for a three year contract. The contract contained a provision which enabled CS26 to terminate the contract at any time “for convenience”. Three weeks after the new contract between CS26 and Isentia began, CS26 gave Isentia notice that the contract was to be terminated and CS26 would be acquiring services from Streem. Mr Smith spoke with Mr Gurney, the General Manager of CS26. Mr Gurney told Mr Smith that CS26 was “very pleased” with the services offered by Isentia “but there is such a big difference in price between Isentia and Streem”. Mr Gurney said that CS26 could “get the same service at a much lower price”. Isentia’s offer was the amount at CS28. Mr Smith was not given an opportunity to revise Isentia’s bid. Mr Gurney told Mr Smith that “given the significant difference in price I can’t refuse Streem’s deal” and “I am not going to change my mind”. Mr Smith understands that the price differential between Isentia and Streem in seeking the contract with CS26 was greater than the amount at CS29.

38    The fifth of the five lost customers is CS30.

39    Mr Smith says that Isentia has provided media monitoring and daily briefing services to CS30 for over 15 years. CS30 receives a high volume of content and data. In November 2018, CS30 issued tender invitations to particular parties to make submissions for the provision of the services. Isentia initially submitted a tender, pricing its services at the amount at CS31. Isentia revised its offer to the amount at CS32 in January 2019. Isentia subsequently reduced its price to the amount at CS33. Mr Smith says that the CS33 price was the lowest price Isentia could offer based on the predicted volume of content, “and copyright fees it was required to pay to [CA]”. Mr Smith says that the price reduction to the CS33 amount meant that Isentia would not receive a profit if it was successful in winning the tender. In January 2019, Isentia was advised that the tender had been won by Meltwater. Isentia understand the position to be “Meltwater’s price was far below Isentia’s price”. Mr Smith is not able to identify the amount of Meltwater’s winning bid.

40    Mr Smith says at para 63 of his affidavit that these five examples are not exhaustive. He says that there are “a large number of other instances” in the customer numbers at CS6 where Isentia has received “express feedback from the customer that price was a significant factor in deciding to change service providers to a competitor of Isentia, in particular, Streem or Meltwater”. Mr Smith says that in many of those cases, he does not know the specific price offered by Streem or Meltwater: para 63. He says that he believes that one of the main reasons why Isentia’s competitors are able to offer lower prices to customers is “because the current copyright environment where, due to the lack of parity in the copyright fees paid to [CA], Streem and Meltwater are able to offer better pricing because their copyright costs are significantly lower”: para 64. He also says that by the time Isentia receives feedback from the customer “to adjust our pricing”, it is often too late to re-engage with the customer and this has resulted in the number of customers of Isentia’s services declining from the number at CS34 in July 2018 to the number at CS35 in December 2018. He says that as at October 2019, the customer numbers had declined to the number at CS36: para 65. He says that most of these customers lost by Isentia are “high value clients”: para 65. By that, he means that they are customers requiring a high volume of content and data and therefore they are customers that would have paid “substantial fees” for that content and data, to Isentia: para 65. He says that it follows that the loss of these customers has had a significant impact on Isentia’s revenue: para 65.

41    Of the clients in the list lost to Meltwater, the 12 month value of billings to the period ending 30 November 2018 included, apart from the customer at CS30, customers whose billings amounted to, respectively, the amounts at CS37. Of the clients lost to Streem (apart from those already mentioned), the 12 month billings by Isentia to those customers to the period ending 30 November 2018, included the amounts at CS38. In each case, in the examples identified, the Confidential Schedule notes at CS37 and CS38 the first and best offers of Isentia (where identified by Mr Smith) and the winning bid (where identified by Mr Smith).

42    It should be kept in mind, at this point, that the interim arrangements so far as the per-clip rate is concerned, reflected in the orders of 23 April 2019 arising out of the reasons published on 16 November 2018, came to pass because Isentia took the position that it was willing to be put on precisely the same footing in terms of the scope of rights licensed to it by CA as the scope of rights licensed by CA to Meltwater, with the corresponding proposition that since there was no point of distinction in the scope of the rights, there ought to be no point of distinction in the per-clip rate payable by Isentia and Meltwater. It should also be noted that in relation to the five particular customers of real significance lost by Isentia (as identified by Isentia), four of those customers have been lost to Streem (CS9, CS14, CS20 and CS26), and one has been lost to Meltwater (CS30). The majority of the customers in Mr Smith’s list at “SAS-2” (the number at CS8) were, however, lost to Meltwater, although the extent of the analysis of those customers is confined to the observations at paras 63, 64 and 65 of Mr Smith’s affidavit.

43    Mr Smith says that the loss of clients to Isentia as described does not reveal the entire picture because new clients won by Isentia tended to be smaller in value than the clients lost. Mr Smith says that of the total number of customers he identifies (CS6), the list includes the number of customers at CS39 whose billings were worth more than the amount in annual revenue identified at CS40, whereas the average value in terms of annual billings of new customer contracts won since the interim licence came into effect on 23 April 2019 (from the earlier effective start date), is approximately the amount at CS41. This result is said to arise because the new customers require a small volume of content and, in relation to those customers, Mr Smith says that Isentia is able to be more competitive on price because “the overall differential in copyright fees paid to [CA] between Isentia and its competitors is smaller”. Nevertheless, Mr Smith says that the price reductions to these new customers has eroded Isentia’s margin on these smaller contracts.

44    Mr Smith says that he is aware that in order to win customers, Isentia has had to offer large discounts on both the previous contract with the customer and its current rate card “because of the price disparity of copyright fees between Isentia and its competitors, particularly Meltwater and Streem”.

45    Mr Smith identifies the discount range offered by Isentia to its customers as set out in “SAS-2” which is said to be the range at CS42. Mr Smith says that in some cases where Isentia has secured a contract, he believes that the discount applied in winning that contract will mean that Isentia will not make a profit on the contract. As to that, Mr Smith gives an example concerning the customer at CS43. Mr Smith says that in November 2019, CS43 put out a tender for the acquisition of media monitoring services. Isentia valued the CS43 contract in the amount at CS44, per annum. This included a profit margin at CS45. Isentia submitted an offer to CS43 in the amount at CS46 which involved a percentage discount as indicated at CS47, in order to win the customer’s business. Mr Smith says that while Isentia was successful in winning the tender, the discount meant that Isentia’s profitability was eroded to the percentage figure set out at CS48.

46    Mr Smith says this at para 71 of his affidavit:

Isentia’s limited capacity to negotiate concessions on contract prices, which is restrained by the copyright fees that Isentia must pay to [CA], has been the greatest challenge I have experienced in my role over the last 3 years since the Press Monitoring and Online Monitoring Licence between Isentia and [CA] (2016 Isentia Licence) was in place. In particular, I have struggled to achieve a balance between ensuring the business remains profitable while also ensuring that Isentia maintains business with existing customers who have themselves provided positive feedback to Isentia regarding the services that Isentia has delivered. It has also been extremely time consuming and difficult to win work from new customers in an environment where Isentia is at a disadvantage in terms of its copyright costs.

47    Mr Smith at Section E of his affidavit makes other observations about Isentia’s revenue decline based upon announcements made to the Australian Securities Exchange (“ASX”).

48    Isentia reported on 23 August 2019 that revenue had declined for Australia and New Zealand from $97.7M in financial year (“FY”) 2018 to $87.6M in FY 2019, a 10.3% decline. This decline is said to have had a direct impact on the Earnings Before Interest, Tax, Depreciation, and Amortisation (“EBITDA”) for the “Isentia Group” which declined from $33.1M in FY 2018 to $23.1M in FY 2019, a decline of 30.2%. Mr Smith says at para 74 that although the “costs of copyright” were lower during FY 2019 due to a reduction in copyright costs by operation of the interim licence (orders), “the absence of a level playing field between competitors in the market has, in my view, had a significant impact on Isentia’s revenue”. Mr Smith also says that he considers that the decline in revenue and EBITDA “can be directly attributed to the client losses and price discounts” described in his affidavit.

49    At Section F of his affidavit, Mr Smith expresses some observations on the topic of Isentia’s “press clip volumes for press monitoring”.

50    Based on Isentia’s declarations to CA consistent with its reporting obligations under the licence, Mr Smith says that the total number of press clips (works the subject of the CA Licence) which have been copied and communicated by Isentia during the period of the interim licence are these. For the period 1 December 2018 to 31 March 2019, the press clip numbers at CS49; for the period 1 April 2019 to 30 June 2019, the number at CS50; and for the period 1 July 2019 to 30 September 2019, the number at CS51. Based on the CS1 per-clip rate for those press clips, Isentia either has paid or will be required to pay CA the amounts, respectively, for the periods represented by the press clip numbers at CS49, CS50 and CS51, as set out at CS52, CS53 and CS54. Mr Smith says that if the per-clip rate had been the CS2 Meltwater rate, the per-clip licence fees payable to CA, in respect of the relevant periods discussed above, would have been reduced, respectively, by the amounts at CS55, CS56 and CS57.

51    Mr Smith says that since the commencement of the interim licence on 1 December 2018 to the period ending 30 September 2019 (the last reporting date), the amount Isentia has been required to pay CA for press clips communicated during the period is the amount at CS58. Had the Meltwater CS2 press clip rate applied, the amount payable would have been the amount at CS59, the difference being the amount at CS60.

52    Mr Smith says this at para 82 of his affidavit:

If I had had the ability to discount the contracts offered by Isentia since December 2018 by a total amount [as set out at CS61], Isentia would have been in a position to have been more competitive with Meltwater and Streem, and I am very confident that Isentia would have lost fewer customers to Meltwater and Streem during that period.

53    The basis for that observation is set out at paras 83 and 84 in these terms:

83    This is because the interim per clip rate has been used to inform Isentia pricing for all new and existing opportunities. Due to the price disparity of copyright fees between Isentia and other media monitoring organisations, this has meant that Isentia is still too expensive in the marketplace and our proposed rates are not competitive. If Isentia is going to win new and existing opportunities, it means that we need to offer further discounts which can push the account in low margin or unprofitable work.

84    A reduction in fees, so that Isentia pays the same as its competitors would mean that Isentia can be more competitive in pricing its services. It would level the playing field and mean that competitors could not create pricing advantage due to copyright fees. This reduction is very important to Isentia and our ability to price services and win/retain clients in the Australian market.

54    Mr Smith says that he has reviewed invoices issued by CA to Isentia during FY 2019 and says that Isentia paid CA the total sum at CS62 in accordance with the terms of the 2016 licence and the interim licence as it applied in the relevant period.

55    Mr Smith says that he has examined CA’s Annual Report for the financial year ending 30 June 2019 which sets out CA’s revenue by category. For FY 2019, CA received $17.6M of its revenue from media monitoring organisations and having regard to the amount paid by Isentia in FY 2019, the amount paid by Isentia represents the percentage at CS63 of CA’s revenue from media monitoring organisations. Mr Smith says that in his earlier affidavit he had estimated Isentia’s market share by value as the percentage at CS64 with Meltwater holding most of the remaining market share. Mr Smith says that based on his present knowledge of the market he estimates that Isentia has the market share at CS65 with Meltwater and Streem holding the market shares at CS66.

56    Apart from these matters, Mr Smith also says that the “continued lack of parity in the market place” has significantly damages Isentia’s business and, as a consequence, its revenue and share price. He says that, for the reasons already discussed, he believes that the terms of Isentia’s interim licence have materially contributed to a further decline in Isentia’s share price since 1 December 2018. Mr Smith refers to the earlier affidavit of Mr James Orlando of 18 July 2018 in which Mr Orlando asserts that the 2016 Isentia’s Licence had materially contributed to a “significant decline” in Isentia’s share price from late June 2016 to July 2018. Mr Smith says that since 18 July 2018, Isentia’s share price has declined from $0.78c per share in July 2018 to $0.35c per share in December 2018 to $0.26c in late November 2019.

57    Mr Smith then makes some observations about the potential consequences of a further extension of the current per-clip rate in the interim licence.

58    Mr Smith says that in circumstances where Isentia’s revenue and share price has continued to decline despite the reduced per-clip rate payable under the interim licence as compared with the 2016 Isentia Licence, it is “crucial”, in Mr Smith’s view, for Isentia, its clients and its shareholders, that “parity of copyright costs” between “market participants” be achieved as soon as possible.

59    Mr Smith says that if Isentia is required to pay copyright costs that are significantly higher than Meltwater and/or Streem’s copyright costs, during the period between now and the final determination of the principal application, Mr Smith believes that it is “inevitable” that Isentia will continue to lose clients to Meltwater and Streem “because Meltwater and Streem will be able to offer more competitive pricing that Isentia is unable to match”. Mr Smith says that if “parity of copyright costs” is not achieved until the conclusion of the hearing, Isentia’s business (and particularly its shareholders), in his opinion, “may suffer irreparable harm that will not be fully remedied even if parity of copyright is implemented at a later date”. He also says irreparable harm will be suffered that will not be fully remedied even if parity of copyright is implemented at a later date.

60    Isentia, on this application, relies upon every aspect of Mr Smith’s affidavit and exhibits.

61    Reliance is also placed upon the affidavit of Mr Timothy Webb who is the solicitor acting for Isentia. Mr Webb is a partner of Clayton Utz.

62    Mr Webb has some things to say about the Scraping Licence which is Attachment B to the orders of 23 April 2019. He observes that the Scraping Licence refers to a Downstream Licence Fee in the amount at CS67 per annum payable pro rata per quarter. Mr Webb says that he understands that that fee was calculated by multiplying an integer called the “Downstream Customer Rate” by the total number of Isentia customers in FY 2018 that received an online monitoring service.

63    Mr Webb says that pursuant to clause 4.4 of the Scraping Licence as between CA and Meltwater of 1 December 2014 (as varied on 7 October 2016), the Downstream Licence Fee payable by Meltwater for the period 1 October 2016 to 30 September 2017 is the amount at CS68. He says that he understands the number of Meltwater customers as at 10 April 2018 was the number at CS69. He says that the Downstream Customer Rate for Meltwater is calculated by dividing the Meltwater Downstream Licence Fee at CS68 by the number of Meltwater customers at CS69 which results in a Meltwater Downstream Customer Rate in the amount at CS70.

64    Mr Webb says that he is instructed by Isentia’s general counsel that the total number of Isentia customers in FY 2018 that received an online monitoring service is the number set out at CS71. Mr Webb observes that Mr Smith has given evidence that as at October 2019, Isentia’s customer numbers had declined to the number at CS36, and thus, at that time, Isentia had the percentage at CS72 of the customers that it had when the Downstream Licence Fee was calculated for the purposes of the Scraping Licence as Attachment B to the orders of 23 April 2019. Mr Webb says that Isentia is of the view that it is now more appropriate to adjust the Attachment B Downstream Licence Fee to reflect the CS72 percentage of the Downstream Licence Fee at CS67.

65    Isentia also relies upon the affidavit of Mr Thomas Gerstmyer.

66    Mr Gerstmyer is the Chief Operations Officer at Isentia Group Limited, the listed parent entity of Isentia. He has held this position since February 2018 and held a range of other positions described at para 8 of his affidavit. He says that in his current role, his specific responsibilities include leading the production of Isentia’s media monitoring activities (including press, broadcast, online and social content), search activities, responsibility for Isentia’s distribution/contact database and responsibility for the provision of daily briefings services, data/content sourcing/procurement, and program management of Isentia’s strategic initiatives. He says that he has had over 20 years’ experience in the “media circulation, logistics, data sourcing/procurement and intelligence industries in Australia” and that he has an extensive knowledge and understanding of Isentia’s functions, technical capabilities and service offerings; the arrangements for licensing copyright in publications; and the needs of media intelligence organisations including the need to respond to changes in technology.

67    As to the trend in the use of press clips by media intelligence organisations such as Isentia and the consequent effect upon licence fee revenue, Mr Gerstmyer has the following things to say.

68    Mr Gerstmyer says that it is apparent to him that the decline in fees paid to CA in the period between about 2012 and mid-2016 was, at least in part, caused by the decline in Isentia’s use of clips which, at that time, attracted a per-clip fee. He says that the number of clips “ingested” by Isentia (that is, copied so as to be available for searches that may be required by customers) has been falling steadily over the past decade and has been falling steadily since 2015 (and possibly for a much longer period although Mr Gerstmyer does not have data for any period prior to the third quarter of 2015). Mr Gerstmyer says that this reduction is due to the increasing importance of digital media and a reduction in the size and number of publications.

69    Mr Gerstmyer says that assuming that other media intelligence organisations maintained stability in their customer numbers or market share, he would expect their use of clips to have declined as well and thus the decline in CA’s revenue is due, in part at least, to the “falling use of clips”. Mr Gerstmyer says that he is not able to comment on CA’s evidence about the accuracy of “aggregate figures” for all media intelligence organisations to the effect that there has been an increase in the use of press clips, but can say that that proposition is not consistent with Isentia’s falling use of clips.

70    Mr Gerstmyer also expresses a view about the marketplace operation of the Isentia Interim Licence. He says that the “lack of parity in the market place with respect to licence fees that Isentia and its competitors are paying to [CA] for licences to copy and communicate copyright works has significantly damaged Isentia’s business, including its revenue and share price”. He says that he has calculated the fall in the market capitalisation of Isentia’s issued share capital in the period between June 2016 and late November 2019 and notes that the share price has fallen from $3.47 to $0.26c with the result that the decline in the total value of issued shares from $694M to $52M represents a total decline of $642M.

71    Mr Gerstmyer also expresses views about the effects of the proposed licence fee variation.

72    Mr Gerstmyer says that it is important to note that the majority of clips communicated by Isentia (and thus the subject of payments to CA and distributions by CA) are sourced from the dominant Australian media organisations of News Corporation and Nine Publishing (formerly Fairfax). Mr Gerstmyer says that in calendar year 2019, of all clips copied and communicated by Isentia, the percentage at CS73 came from News Corp Publications and the percentage at CS74 came from publications of Nine Publishing (including Australian Community Media). Mr Gerstmyer also says that any reduction in copyright fees paid by Isentia to CA in respect of News Corp and Nine Publishing (with consequent distributions to those entities) represents “an extremely small part of their revenue”. Mr Gerstmyer gives gross revenue figures for 2018/2019 for News Australia Holdings Pty Limited (a subsidiary of News Corp) and Nine Entertainment Co of $5.78B and $1.84B, respectively, with Nine Publishing revenue at $425M.

73    Mr Gerstmyer also says that News Corp and Nine Publishing are organisations which are able to address (“offset”) any reduction in licence fee revenue which might be ordered by the Tribunal, by withdrawing their publications from the scope of the interim licence (by giving notice that the relevant publications are excluded from the licence given by CA), which Mr Gerstmyer says has the effect of forcing media intelligence organisations to negotiate separate licences for their respective publications. He says that this is exactly what has happened recently.

74    With effect from 20 March 2020, News Corp has withdrawn The Australian and The Weekend Australian from the scope of the licence granted by CA. With effect from 17 January 2021, Nine Publishing has withdrawn The Australian Financial Review (and four other titles) from the scope of the licence granted by CA. All of these publications are licensed by CA to media intelligence organisations by means of a sub-licence of a licence granted to CA by CopyCo. News Corp and Nine Publishing have withdrawn, from CopyCo, the right to grant licences in respect of the nominated publications.

75    Isentia and CA have put on evidence from economic experts about various matters. I will return to that evidence later in these reasons.

76    In the period between publication of the reasons on 16 November 2018 and the making of the orders on 23 April 2019, negotiations took place between the solicitors for CA, MinterEllison, and the solicitors for Isentia, Clayton Utz, in relation to a number of matters but, in particular, in relation to the Downstream Licence Fee. In particular, the Tribunal has been referred to a letter from MinterEllison to Clayton Utz dated 7 December 2018, a letter from Clayton Utz in reply dated 11 December 2018, a letter from MinterEllison to Clayton Utz dated 12 December 2018 and a letter from Clayton Utz to MinterEllison dated 18 January 2019. Other letters are included within “AAS-2” to the affidavit of Mr Adam Suckling affirmed 13 February 2020. I will return to this correspondence later in these reasons.

77    Before considering the evidence relied upon by CA in resisting both limbs of Isentia’s present application, the following matters emphasised by Isentia in reliance upon the evidence just discussed, should be noted.

78    Isentia says that Mr Smith is a person “close to the action” in dealing with customers and the problem of loss of customers. Isentia says that in the interim period prior to determination of the principal application, it is suffering “irredeemable prejudice” by the loss of clients that cannot be retrieved easily once the principal application is determined. It says that although there are, no doubt, a range of factors that determine whether a current customer might elect to re-appoint (or not) Isentia or choose to appoint Isentia (or not) in deciding the outcome of a particular selection or tender process, one of the factors, on the state of the evidence, is price. Isentia observes that Mr Smith says that price is at the heart of winning contracts, and within the price matrix, “parity” in the price paid for the interim licence to exercise the rights subsisting in the subject matter is “critical”.

79    Isentia says that on the basis of the evidence of Mr Smith and Mr Gerstmyer, there is at least a serious question made out that the difference in the per-clip rate as between Isentia and Meltwater (and, it is said, Streem) is playing a role in the selection decision of customers prejudicially to Isentia.

80    Isentia says that, although CA says that the disparity in the interim rate has not been shown to be a cause of competitive disadvantage giving rise to the contended prejudice, the answer, to the contrary, is to be found in the evidence of Mr Smith and Mr Gerstmyer. Isentia also says that although CA, between now and the final decision, will receive lesser revenue from Isentia should the interim reductions sought by Isentia be accepted (with consequential lesser distributions to the relevant copyright owners), the interim prejudice to CA of this additional cash flow deprivation is offset by two important considerations.

81    First, if CA is correct in its view about the true value of the rights the subject of the licence and the reasonableness of the charge it seeks to obtain for the grant of those rights, CA will receive a “catch up” payment which, in time, will put it in the position it says it ought to have been in from the outset of the interim arrangement, whereas Isentia cannot be put back into the relationships it enjoyed with customers lost to rivals in part due to the lack of parity in the “copyright cost” in the interim period.

82    Second, the contended prejudice of disruptions in the budgeting processes undertaken by the rights owners by receiving a lesser level of distributions in the interim period (but caught up later should CA be shown to be correct on the value/price/licence charge question) is ultimately only a matter of “timing”, not a matter of irremediable prejudice.

83    Isentia also says that although CA says that the loss of customers has something to do with the quality of the Isentia service and Isentia’s lack of state of the art technological functionalities, one thing that is clear on the evidence is that the “input price” for access to the rights is different, and it is bringing about irremediable distortions in customer selection.

84    CA contests the entirety of these propositions.

85    CA says in brief summary, that Isentia’s evidence does not establish a basis for concluding that the difference in the price paid by Isentia for access to the rights, as compared with the price paid by Meltwater (and Streem), is a cause of the loss of customers from Isentia to Meltwater or Streem and thus the foundation for the application falls away entirely. Moreover, CA says that the prejudice to it and the publisher members of CopyCo (and some non-publisher members of CopyCo whose rights are said to have been exercised by Isentia without the authority of those non-publisher members), is significant should the Tribunal accept either or both of the limbs of Isentia’s present amended application.

86    CA’s primary response to Isentia’s application is to be found in the evidence of Mr Adam Suckling, the Chief Executive Officer of CA. Mr Suckling has been in this role since August 2015.

87    Apart from his own knowledge of relevant matters, Mr Suckling was informed about matters relevant to the application by other individuals. In December 2015, Mr Jeremy Jacobs commenced in the role of Chief Operating Officer. Mr Jacobs is assisted by Mr Carlin Campbell and Dr Neil Fraser. It is not clear when these individuals commenced in their particular roles. In May 2016, Mr Guy Johnson assumed the role of Director of Commercial Licensing and Visual Arts Licensing. He is assisted by Ms Lucinda Gardiner who, since July 2017, has been the Licensing and Compliance Manager at CA.

88    As to Mr Suckling’s background, in 1997 he was appointed General Manager of Regulatory Affairs with Optus and appointed Director of Singtel’s International Finance Operations in 2001. In 2002, he left that role and joined Foxtel as General Manager Wholesale. He was appointed Director of Policy and Corporate Affairs at Foxtel in 2008. From 2012, he was the Director of Policy, Corporate Affairs and Community Relations at News Corp.

89    In his role at CA, he is responsible for leading the development of CA’s business strategies; overseeing CA’s statutory and voluntary licensing arrangements; and leading the voluntary licensing negotiations between CA and media intelligences organisations. He is broadly aware of the changing nature of the market in which Isentia, Meltwater and Streem operate and the changing nature of their businesses. He is familiar with the interim licences subsisting between CA and, respectively, Isentia, Meltwater and Streem and he is familiar with the 2016 Press Monitoring and Online Monitoring Licence between CA and Isentia otherwise known as the 2016 Isentia Licence.

90    As to these interim licences, Mr Suckling says that they have had the following consequences for CA pending the final determination of the proceedings.

91    First, the licences have prolonged, at least on an interim basis, an “outdated set of licensing arrangements”.

92    Second, it has prolonged, at least on an interim basis, a “licence fee structure and quantum” that in CA’s view undervalues the content licensed by CA.

93    Third, apart from the fact that CA seeks a higher licence than that which is presently being paid, pending the determination of the principal proceeding, Mr Suckling says that CA has not had the benefit, in the interim, of any CPI adjustments to the licence fees.

94    Mr Suckling says any further decrease in the per-clip rate and the online Downstream Licence Fee as a result of this application would “aggravate” the matters described at [91], [92] and [93] of these reasons especially, it is said, in circumstances where it is unclear that the current differences in interim licence fees are the cause of the detriment that Isentia says it is suffering.

95    Mr Suckling observes that CA maintains records of the licence fees invoiced to, and paid by, each of Isentia, Meltwater and Streem in the period between 2004 and calendar year 2019 under the various licences each company has with CA. Based on that information, Mr Suckling has caused a graph to be prepared by Mr Campbell using that information: CS75. The information is, of course, highly confidential. However, some general observations can be made about the graph in these reasons. The graph shows the rise in fees paid by licensees (in the aggregate) in the period 2005 to 2012. It has a certain progression. The graph then shows a decline in fees in the period between 2012 and 2014 and a slight rise in the period between 2014 and 2016. The graph then shows a very significant increase in fees in the period between 2016 and 2018. In the period 2017 and 2018, the licence fees begin, graphically, to reflect the progression and approximation of fees which would have been derived in the 2017 and 2018 period had the trend, revealed in the period 2005 to 2012, continued and found expression in the period 2017 and 2018.

96    Of course, it should be noted that the 2016 Isentia Licence bears that description because it commenced in 2016 and since Isentia was, at that time, responsible for that percentage of the total market for licence fees derived by CA noted at CS63, the event of Isentia and CA entering into the 2016 Isentia Licence would have played a large part in establishing the pattern reflected in the graph in the period 2017 and 2018.

97    The graph also shows a dotted line which reflects the progression in licence fees which would have been received had the trend reflected in the period 2005 to 2012 continued throughout to 31 December 2019 and into 2020. As to FY 2020, the graph reflects a forecast by projecting the fees paid in the first quarter of FY 2020 for the full year. The graph shows three end points at 2020. The top point is the dotted projection line. The next, lower, point reflects the end point for licence fees from licensees for the period 2019 and the next, lowest, point reflects the difference between fees to be paid by licensees under the current arrangements and the fees that CA would receive should Isentia be successful in this application. In terms of the quantum of the difference, CA will be worse off, in terms of interim revenue deprivation, by approximately the amount at CS76.

98    Obviously enough, there is a certain fundamental inconsistency between Mr Suckling’s “broad awareness” of the “changing nature of the market” in which Isentia, Meltwater and Streem operate and the “changing nature of their businesses” on the one hand and an expectation, in an age of pronounced disruption, that licence fees reflecting a pattern of growth in the period 2005 to 2012 can simply be projected from 2012 to 2020. The question of the underlying value of the copyright in the works the subject of the licence by CA to the various media intelligence entities, upon which the projection from 2012 to 2020 seems to be based, is a contested question, and so too is the question of whether the “payment of charges” CA seeks (or conditions) are “reasonable” or “unreasonable” for the purposes of s 157(3) of the Act.

99    Mr Suckling addresses a number of topics in his evidence.

100    The first topic concerns the position in relation to rightsholders (publishers) who are not members of CopyCo.

101    Mr Suckling observes that under the 2016 Isentia Licence, Isentia was licensed to “scrape and communicate portions” of works owned by non-CopyCo members. Thus, non-CopyCo rightsholders regularly received distributions from CA, from the licence fees paid by Isentia under that licence. However, under the interim licence established by the orders of 23 April 2019, Isentia is not licensed to scrape and communicate portions of non-CopyCo content. Thus, non-CopyCo rightsholders will not receive distributions, from CA, from the licence fees paid by Isentia under the interim licence. CA is not aware of whether Isentia otherwise holds a licence directly from non-CopyCo rightsholders to scrape and communicate portions of their works.

102    The two largest non-CopyCo publishers are the McPherson Media Group (“McPherson”) and the Star News Group (“Star”). Mr Suckling says that based on the number of press clips reported by Isentia in FY 2019, Isentia paid the amount at CS77 to copy and communicate McPherson press clips. Mr Suckling says that had the “effective rate” at CS4 continued to apply, McPherson would have received the amount at CS78. As to Star, Isentia paid the amount at CS79 and would have paid the amount at CS80 had the rate at CS4 continued to apply.

103    Mr Suckling says that where copyright fees are decreased, or payments delayed, smaller regional publishers like McPherson and Star experience an immediate impact, and because smaller publishers do not have the advantage of subscription and advertising revenues of larger publishers, royalties are particularly important to them.

104    Mr Suckling says that since December 2019, CA has received a number of enquiries from non-CopyCo rightsholders asking about why they have not received “webscraping distributions” or why their distributions have been “reduced” or “delayed” from CA (including in circumstances where rightsholders say they are aware that Isentia has been using content from their websites). Mr Suckling gives an example in relation to the publisher at CS81. Mr Suckling says that on 13 January 2020, CA received an enquiry from CS81 to the effect that its last payment was in May 2019 and since then very small amounts have been paid to it. The publisher at CS81 advised CA on 2 February 2020 that Isentia had obtained digital access to content behind CS81’s paywall. On 4 February 2020, CA advised CS81 that there had been significant delays in invoicing and distributing Isentia licence fees and on that day CS81 advised CA that it receives no copyright royalties from Isentia directly for digital articles, and that online volumes had increased by the amount at CS82 between calendar year 2018 and calendar year 2019.

105    Mr Suckling understands that McPherson has a PDF supply agreement with Isentia which provides Isentia with access behind McPherson’s paywall for the supply of content. Mr Suckling says that although McPherson will receive delayed press clipping distributions from CA for Isentia’s use of those works, McPherson will not be receiving webscraping distributions from CA as Isentia is no longer licensed to undertake webscraping under its interim scraping licence.

106    The second topic concerns the position in relation to CopyCo rightsholders.

107    Mr Suckling says that since April 2019, CA has received a number of enquiries from CopyCo rightsholders, such as News Corp and Nine Publishing, asking why they had not received distributions from CA or why they had received “so little” by way of distributions from CA. Mr Suckling understands that the royalties these publishers receive, or expect to receive, from media intelligence organisations (through the mechanism of distributions by CA), for the use of their content, affects their financial planning and budgeting processes. Mr Suckling’s experience tells him that by February 2020, most publishers will have commenced their budget processes for the following year based on the current interim rates prevailing under the interim licence which, in turn, affects their operations including staffing and revenue projections. Mr Suckling says that if the interim fee payable by Isentia is reduced, he anticipates that CopyCo publisher rightsholders would experience significant prejudice including shortfalls in their budget (and thus expected revenue), adversely affecting their operations as a whole. Mr Suckling gives two examples of this particular impact and its prejudice.

108    First, on 29 April 2019, CA received an enquiry from News Corp to the effect that the new interim licence fee had commenced. News Corp’s representative said that News Corp was currently performing its month end financial close and wanted to understand how the new licence fee would affect its revenue. News Corp asked for an estimate of both prospective and retrospective revenue.

109    Second, Mr Suckling says that on 27 February 2019, CA received an enquiry from Nine Publishing advising that it was in the “full throws of FY 20 planning” and noting that CA had previously given a forecast/estimate of payments for the next financial year. Nine Publishing asked whether this was something that CA would be able to do.

110    Mr Suckling says that based on the press clips reported by Isentia in FY 2019, Isentia paid the amount at CS83 to copy and communicate press clips of CopyCo rightsholders under the interim press clipping licence and observes that had Isentia continued to pay the effective rate at CS4, it would have paid the amount at CS84 to use that content. In other words, the CopyCo publisher members suffered a reduction in distributions from CA for FY 2019 by reason of the earlier interim reduction, of the amount at CS85. These past amounts, like the earlier amounts Mr Suckling mentioned, are calculated on the basis of the difference between the effective rate at CS4 and the interim rate at CS1. The proposed interim further order sought by Isentia would operate on the basis of a forward-looking reduction calculated by reference to the difference between the amount at CS1 and the amount at CS2.

111    The third topic Mr Suckling addresses is the inconsistency he observes between the decline in CA’s overall revenue from Isentia, Meltwater and Streem, on the one hand, and the use of CA licensed works by those entities, on the other hand.

112    Mr Suckling says that CA maintains records of the number of press clips and “portions” reported by each of those entities under their particular licence. The total press clips for the financial years 2016 to 2019 and total corporate downstream press clips, total government downstream press clips and total portions for those financial years is set out in the table at CS86. Mr Suckling notes that the use of portions dropped significantly in FY 2018 and CA is not able to explain that decline. Mr Suckling also notes an apparent anomaly in the decline in Meltwater’s reported use of portions from CS87 in FY 2017 to CS88 in FY 2018 in circumstances where there does not appear to have been a substantial change in Meltwater’s method of operation. Mr Suckling observes that between FY 2018 and FY 2019, CA’s revenue from Isentia, Meltwater and Streem declined by the percentage at CS89 and yet the use of press clips increased by the percentage at CS90. As there may be an “anomaly” in the data set for FY 2018, it may be more useful to look at the data for FY 2016, FY 2017 and FY 2019. In the period between FY 2016 and FY 2017, total press clips declined by the number at CS91. In the period between FY 2017 and FY 2019, press clips declined by the number at CS92.

113    The fourth topic Mr Suckling addresses is Isentia’s press clip rate under the interim press clipping licences.

114    As a general comment, Mr Suckling says that the per-clip rate is a rate that has not been increased other than “intermittently” based upon CPI increases, since 2001. Mr Suckling observes that the Meltwater Interim Licence involves a press clipping licence which involves the per-clip rate at CS2 plus a per-clip card for downstream use. Mr Suckling observes that the interim stream licence is subject to a minimum amount but “is otherwise identical to the Meltwater Clip Rate” which is the per-clip rate at CS2. The Isentia Interim Licence per-clip rate was set by the Tribunal in the reasons of 16 November 2018 in the amount at CS1 but otherwise it would have been the rate at CS4.

115    To illustrate that matter, it means that under the 2016 Isentia Licence and the licence arrangements struck by CA with Meltwater (and the otherwise identical Streem licence, both of which continue to apply on an interim basis), if Isentia was trying to hold an important customer with a demand profile of, say, 100,000 press clips or win a new customer of that kind, it would be required to pay CA the amount at CS93 whereas each of Meltwater and Streem would be required to pay the amount at CS94, a difference of the amount at CS95, and under the interim licences Isentia would be required to pay the amount at CS96 and Meltwater and Streem would pay the amount at CS97, a difference of the amount at CS98.

116    Mr Suckling observes that the press clip rates currently paid by Meltwater and Streem have not been adjusted for CPI since 2016. Mr Suckling says that the per-clip rate currently applied to Meltwater represented a CPI adjustment to the then historical per-clip rate applying in or about 1 July 2015. Mr Suckling says that if that rate had been adjusted for CPI to the present, the per-clip rate in FY 2019 payable by Meltwater would be “in the order of [the amount at CS99]”, which is not significantly different from the Isentia interim rate at CS1.

117    Mr Suckling says that, in short, Isentia’s application to further reduce its per-clip rate from the amount at CS1 to the amount at CS2 would be an “unreasonable reduction” in circumstances where CS2 reflects a fee set in 2015 under a now expired licence that has not been adjusted for changes in the CPI since 2015. Mr Suckling says that if Isentia, in FY 2019, had paid the per-clip rate at CS2 instead of the rate at CS1 that reduction would have reduced the amounts payable by Isentia, through CA, as set out at CS100, CS101 and CS102.

118    The fifth topic Mr Suckling addresses is the topic of Isentia’s online downstream licence fee under the interim scraping licence.

119    Mr Suckling says that he understands that Isentia is seeking to adjust the downstream licence fee under the interim scraping licence by the amount at CS103. The affidavit of Mr Webb suggests that the downstream licence fee ought to be the percentage at CS72 of the amount at CS67 which seems to constitute the amount at CS104.

120    Mr Suckling observes that at [108] of the interim decision, the Tribunal determined that it would make sense to determine the fee payable to CA in respect of downstream use to be an amount based on the application of CA’s rate card. That rate card applied a rate for the downstream use of press clips but not for portions. Mr Suckling says that deriving a downstream licence fee in that way would have resulted in an increased licence fee payable by Isentia as compared with the fee it had been paying under the 2016 Isentia Licence and, plainly enough, that was not what was intended by the Tribunal. In the result, Mr Suckling says that CA sought to adopt a pragmatic and reasonable approach to determining a methodology to derive an online downstream licence fee for Isentia which used the fee methodology adopted for determining Meltwater’s downstream licence fee to the extent that that was possible as a benchmark. These negotiations on a “without prejudice” basis took many months. The amount was ultimately included in the orders of the Tribunal on 23 April 2019.

121    However, Mr Suckling says that CA understood that the result of these negotiations was an “interim solution agreed between the parties” rather than one determined by the Tribunal. Mr Suckling says that CA agreed to this fee on a “fixed fee basis” and not one that would be adjusted based upon changes in customer numbers (in the way suggested by Mr Webb) while the interim licence was on foot, particularly in circumstances where CA is not in a position to unilaterally adjust the fees payable by other media intelligence organisations under the respective interim licence arrangements. As to these matters, Mr Suckling refers to the correspondence between MinterEllison and Clayton Utz to which I will return.

122    As to the Meltwater customer rate at CS70, Mr Suckling observes that if that FY 2018 rate was adjusted for CPI at FY 2019, the customer rate would be approximately the amount at CS105. Mr Suckling observes that if the CS105 rate was applied to Isentia’s point in time online monitoring customers as at October 2019 (being the number of customers at CS36), the annual online downstream licence fee would be the amount at CS106. Mr Suckling observes that Isentia acts as CA’s agent in granting customers a downstream licence to make internal use of the portions they obtain from Isentia and CA understands that Isentia absorbs the online downstream licence fee and does not separately charge its customers for that downstream licence.

123    The sixth topic that Mr Suckling addresses is the nature of the businesses conducted by Isentia, Meltwater and Streem.

124    Mr Suckling says that a proper understanding of the reasons why customers transition between services provided by competing media intelligence organisations involves understanding the factors taken into account by customers in assessing competing services. Mr Suckling says those factors include price, platform functionality, the nature of the service offered, whether the service meets the needs of the business of the customer, and the level of service provided by the supplier.

125    As to Isentia, Mr Suckling says that Isentia has historically had a large incumbent customer base with a high volume of corporate and government clients. Mr Suckling extracts a number of comments about Isentia from a Morgan’s investment blog and an article published on a particular website, published respectively on 7 January 2020 and 5 June 2019. The Morgan’s investment blog suggests that Isentia is “back in the game”; that narrowing the gap in technology and price have been critical; and that Isentia’s under-investment in technology, products and processes has allowed competitors to take market share by being quicker with response times, cheaper solutions and better customer service.

126    The website Mumbrella says that Isentia is under siege from upstart rivals including Meltwater and Streem, but that Isentia has a strategy for its “comeback” based on “an efficient operating model … automation the best possible tech tools … world class market centric innovations … and creating regional scale”.

127    It is not clear that (and given the confidentiality around these numbers, I doubt that) the authors of the opinions in the Morgan’s blog and the Mumbrella site (and I do not know on the evidence the status and authority of these sites), know anything of the per-clip price differential payable by Isentia to CA under the 2016 Isentia Licence as compared with the Meltwater and Streem per-clip rate, and thus the role the differential rate may (or may not) have played in downstream rivalry between these entities.

128    Mr Suckling also notes a presentation by Isentia at a conference on 21 November 2019 in which it says that it is the leading provider of media intelligence in the Asia Pacific region; that it is well positioned for success with unique strengths; that it has a new executive team; that it has sought to restructure its cost base and has described its interim licences as “favourable”; that it has introduced, or is seeking to introduce, important changes including automation (as “press relevancy processing is now 80% automated using machine learning”), launching a mobile app, establishing an efficient operating model underpinned by a single platform, automated production workflow, adopting and operating a single platform business and undertaking significant operating and capital investment in building new products and technology; that 78% of Isentia’s revenue is recurring; and that a rapidly evolving media landscape is driving demand for media intelligence.

129    As to Streem, Mr Suckling says that the business was formed in 2013 (although it seems to have been launched in 2017) with a strong focus on automating and streamlining media monitoring (intelligence) services. It has actively targeted government and blue-chip clients that are or were previously serviced by Isentia. Streem has a high volume of corporate and government clients. Mr Suckling refers to articles downloaded from Streem’s website. One article dated 29 January 2020 observes that Streem launched its business in 2017 and quickly won major government departments with its “comprehensive, real-time product suite, reasonable pricing and responsive customer service”. The article observes that Streem has “eaten into” Isentia’s government base. It says that Streem has brought “massive innovation to the sector” which has prompted “a large migration of blue-chip customers”. Another article, dated 23 January 2020, says that Streem has allocated significant resourcing to transitioning customers to its platform with a revision of key words and search terms. A third article on Streem’s website, dated 11 June 2018, records that Streem states it has brought significant innovation to the media intelligence market.

130    As to Meltwater, Mr Suckling says that it was first licensed by CA in 2014 and emerged with a technology-driven focus on providing scraping services in a way which differentiated it from Isentia. Mr Suckling says that Meltwater has tended to target Isentia’s customer base. Mr Suckling quotes one of Meltwater’s business leaders who describes his company as providing “an offering that is extremely hard to compete with”.

131    The seventh topic Mr Suckling addresses concerns matters relating to Mr Smith’s affidavit.

132    Mr Suckling says that CA sought a range of documents from Isentia (as between the solicitors) and although CA’s solicitors have received “a bundle of documents”, CA is nevertheless not in a position to ascertain whether the difference in fees payable by Isentia, Meltwater and Streem under their interim licences is adversely affecting Isentia or whether lowering the interim fee as sought would have “any effect” on Isentia’s ability to win and maintain customers.

133    As to specific matters, Mr Suckling notes an article of 15 August 2019 in which Isentia’s CEO, Mr Ed Harrison, observed, in an interview, that Isentia’s operating model now (as at 15 August 2019) automates 80% of the work of ingesting print material, determining its relevance to a customer and distributing the material to the customer, whereas a year earlier, 80% of that work was undertaken by individuals. Mr Harrison says that the shift to automation involves a re-focus from operational manual work to “high-skilled tech work”. Commenting on the competitive market for media monitoring services, Mr Harrison also says that “we renew the vast majority of our clients, whether it’s big corporates or whether it’s big government accounts”. Mr Harrison also said this:

We have people coming back to us who have maybe been away for some time as well. That’s just the cut and thrust of business. So, it’s not surprising to us at all that occasionally people want to try a different solution and then we really expect that over a period of time, we’ll have the opportunity to bring them back in.

134    Mr Suckling says that Streem launched a full suite of services in 2017 with approximately 50 employees using automated processes with the result that Streem “has an employee cost base that would be substantially lower than Isentia’s”, in Mr Suckling’s view. Mr Suckling says that Streem’s services are characterised as “faster and cheaper due to full automation”.

135    Mr Suckling also notes the remarks of Isentia’s Chairman in the FY 2018 Annual Report on the topic of competition. He quotes these observations from the report:

(i)    The number and type of competitors has increased across all markets as technology and the shift to digital media lowers the barriers to entry for the provision and reporting of media intelligence. As a result, price compression and customer churn have increased, especially in the Australian market. This is expected to remain a factor in the medium term;

(ii)    At the back end, the cost-out program has prioritised the automation of several labour-intensive activities to streamline operations.

136    Mr Suckling quotes another article from the Mumbrella site dated 22 February 2019 which says that despite the restructuring of the Isentia business, “the group’s operating costs only fell by 0.3% to $51.2m”.

137    Mr Suckling, in commenting upon the matters mentioned by Mr Smith (described at [51] and [52] of these reasons), says that the cost difference between the Isentia rate and the Meltwater interim rate (CS1 and CS2 respectively) is the annualised amount at CS107 which is approximately the percentage at CS108 of Isentia’s reported cost base of $99.4M in FY 2019.

138    As to the clients lost by Isentia to Meltwater and Streem, Mr Suckling says that Mr Smith’s examples show that large reductions in Isentia’s pricing had no impact on the success of Isentia’s bids. Mr Suckling says that of the number of customers at page 1 of Mr Smith’s Exhibit “SAS-2” (at page 8 of the exhibit) being the number of customers at CS109, two of those customers, although not identified by Mr Suckling (but the two customers seem to be the two customers at CS110) are examples where the winning bid was higher than or equal to Isentia’s offer price.

139    Moreover, Mr Suckling says that Exhibit “SAS-2” provides “many examples” where Isentia’s first tender offer was equal to, or higher than, the last 12 months of billings to that customer by Isentia, and Isentia was not invited to submit a further offer. Again, although Mr Suckling has not undertaken the exercise of identifying the number of customers in that category, there appear to be the number at CS111 in that category when each entry in “SAS-2” is properly examined.

140    Mr Suckling then comments on four of the five specific customers described by Mr Smith at Section D of Mr Smith’s affidavit. No comment is made by Mr Suckling about the fifth customer at CS30. Mr Suckling says that for the period 1 December 2017 to 30 November 2018 (before the Isentia Interim Licence commenced), Isentia reported that the number of press clips for each of the four customers is the number set out at CS112.

141    The table at CS113 (having regard to the period of reporting) sets out the per-clip rate under the 2016 Isentia Licence, the rate under the Isentia Interim Licence, the Meltwater rate and the total cost of the clips described in the table at CS112.

142    The difference in the copyright input cost having regard to the table at CS113 is the amount in the table at CS114. Mr Suckling says that the difference in the per-clip rate (under the interim licence) represents the percentage of the winning bid identified at CS115.

143    The winning bid for the customer at CS26 is not known and therefore the calculation cannot be undertaken.

144    The eighth topic addressed by Mr Suckling is the differences in the interim licences prevailing between CA and Isentia, Meltwater and Streem.

145    Mr Suckling says that there are differences in the scope of the rights granted by CA to Isentia and Meltwater, on the one hand, and the scope of rights granted by CA to Streem, on the other hand. Mr Suckling says that Streem has the “broadest grant of rights of any MMO under the interim licences”. Mr Suckling observes that the per-clip rate payable by Streem was agreed in 2017 and “is subject to a minima but otherwise identical to the Meltwater clip rate [at CS2]”. This is so even though it has the broadest grant of rights.

146    As to Isentia, Mr Suckling observes that it elected to put itself on the same footing as Meltwater and Mr Suckling says that Isentia is therefore no longer licensed to store press clips and portions for more than six months; or to make scraped copies of non-CopyCo works and communicate portions thereof; or to fax or make press clips available online; or to copy and communicate licensed works outside Australia. Mr Suckling says that non-CopyCo works historically comprised 20% of the volume of portions reported by Isentia. CA does not know whether Isentia now has a licence from non-CopyCo publishers directly.

147    Mr Suckling says that Isentia has not complied with the interim licence ordered by the Tribunal so as to operate from 1 December 2018.

148    There are three contended breaches of the interim licence.

149    First, although Isentia took the position, through its solicitors on 11 December 2018, that it would be in a position to comply with the reporting obligations under the interim licence, CA says that it did not receive accurate data from Isentia (in accordance with the quarterly reporting obligation) that would enable CA to invoice Isentia for use of the licensed works since 1 December 2018 (and distribute fees to rightsholders), until 27 November 2019. Thus, distributions to rightsholders were delayed by about one year. CA says that consequently, the licence fees payable for use of the content are being paid more than 12 months in arrears. As a result, CA has been receiving queries from CopyCo rightsholders since April 2019 and from non-CopyCo rightsholders since December 2019 asking why the distributions have either been not paid or delayed in payment.

150    Second, CA says that Isentia has said that it will not be in a position to comply with an obligation under the interim scraping licence to report click-through rates in respect of portions until the second quarter of FY 2020. CA says that it has not received any further information as to that matter.

151    Third, CA says that under the interim press clipping and scraping licences, Isentia is only licensed to store copies of portions and press clips for up to six months. CA says that it has an Isentia media monitoring service as part of its business operations and, as at 7 February 2020, CA personnel were able to access portions and full text articles over six months old. Screenshots of these portions and full text articles form part of Exhibit “AAS-1” to Mr Suckling’s affidavit. The exhibited content is from the Sun Herald, the Sydney Morning Herald and the Australian Financial Review.

152    Apart from the matters mentioned at [149], [150] and [151], Mr Suckling says that if Isentia makes full text licensed works available online through its mediaportal service, that step is not presently licensed to Isentia under the interim press clipping licence. However, CA says that it does not have the information that enables it to assess whether or not Isentia is taking that step.

153    Mr Suckling also says that Isentia has made enquiries of CA about a licence to deliver press clips and portions to New Zealand and to supply content to overseas media monitoring organisations. Copies of the relevant letters are identified in Mr Suckling’s affidavit. Mr Suckling notes that Isentia is not licensed by CA under the interim licence to do those things.

154    Further, Mr Suckling says that CA does not “presently have any visibility over how Isentia calculates and attributes revenue under its interim scraping licence”.

155    As to the Meltwater and Streem Interim Licences, Mr Suckling says this.

156    CA’s primary position is that notwithstanding that CA would prefer that Meltwater and Streem were licensed under CA’s proposed licence, those licences “should not be further adjusted at this time”. CA’s position is that if the Tribunal is minded to adjust an interim licence because of a lack of parity, then an alternative approach it urges is to vary the relevant licence fees payable by Meltwater and Streem to elevate their per-clip rate to align it with that of Isentia.

157    Mr Suckling, on that footing, sets out some calculations on the potential effects of such an adjustment. Mr Suckling says that if Meltwater’s interim press clipping licence had been varied to replace the Meltwater clip rate with the Isentia (interim) clip rate in calendar year 2019, Meltwater would have paid the amount at CS116 instead of the amount at CS117, being an increase set out at CS118. Mr Suckling says that if Streem’s interim licence was varied to replace the Streem clip rate with the Isentia (interim) clip rate in calendar year 2019, Streem would have paid the amount at CS119 instead of the amount at CS120, being an increase set out at CS121.

158    Thus, the additional licensing revenue that would flow from each of Meltwater and Streem if they had paid, in calendar year 2019, the Isentia interim clip rate, is the amount at CS122.

159    As to Meltwater’s online downstream licence fee, Mr Suckling makes the point that the fee was commercially negotiated as a fixed annual fee. Mr Suckling says that the fee was not subject to adjustment based on customer numbers, or otherwise, during the term of the 2016 scraping licence and nor has it been adjusted under Meltwater’s interim scraping licence. Mr Suckling says that if the Meltwater customer rate was applied to the number of online monitoring customers that CA estimates for Meltwater in FY 2020 based on its reporting to CA (the number at CS123), Meltwater’s annual online downstream licence fee would increase to the number at CS124, being an annual increase of approximately the number at CS125. Mr Suckling says that if the adjusted customer rate was applied to the number of online monitoring customers that CA estimates for Meltwater in FY 2020, Meltwater’s annual online downstream licence fee would increase to the number at CS126, being an annual increase in the amount at CS127.

160    As to Streem, Mr Suckling says that Streem has a broader set of rights under its licence with CA and the licence fee structure applied to online monitoring and downstream use is different to that which applies to Meltwater and Isentia. In particular, Streem does not pay CA a separate online downstream licence fee. Instead, it pays CA the greater of a minimum amount per year, being the amount at CS128 and the percentage at CS129 of online monitoring revenue it derives, for both the right to copy and communicate portions and for the downstream use of those portions.

161    It is now necessary to examine the exchanges between the solicitors which led to the downstream licence fee agreed for the purposes of the Isentia Interim Licence.

The downstream licence fee negotiations

162    By a letter dated 7 December 2018 to the solicitors for Isentia (Clayton Utz), the solicitors for CA, MinterEllison, put a proposal to Clayton Utz based on the customer numbers reported by Isentia that CA pay an annual downstream licence fee in the amount at CS67 plus GST. In that letter, MinterEllison observed that the means by which the CS67 figure had been calculated was set out in the letter and that in CA’s view the amount represented a fair and equitable way forward in the circumstances. The method set out in the letter (by reference to a document described as “Restricted Access Attachment 1”) was in the terms set out at CS130. The relevant numbers in Restrictive Access Attachment 1 are the numbers already discussed in describing Mr Webb’s evidence.

163    By letter dated 11 December 2018, Clayton Utz responded to the MinterEllison letter and at point 5, the author, Mr Webb, said this:

CAL has proposed that there be an “annual” Downstream Licence Fee of [the amount at CS67] plus GST. Would you please confirm whether CAL proposes that this amount remain fixed for the duration of the interim period, or be adjusted by reference to changes in the number of Isentia clients that receive an online monitoring service during that period.

164    By letter dated 12 December 2018, MinterEllison responded to the Clayton Utz letter and, as to point 5, MinterEllison said this:

Our client proposes that the online annual Downstream Licence Fee remain fixed for the duration of the interim period. This is consistent with what has been ordered in relation to Meltwater.

165    By a letter dated 18 January 2019, Clayton Utz responded in relation to a range of matters but as to the topic of the definition of the terms “Downstream Licence” and “Downstream Licence Fee”, Clayton Utz said this:

Annexure 2 – Isentia will agree, on a non-precedential basis (as per clause 8 of the current CAL/Isentia licence), to the proposed annual Downstream Licence Fee set out in paragraph 3 of your “without prejudice” letter dated 7 December 2018.

166    Paragraph 3 of the MinterEllison letter of 7 December 2018 is the matter described at [162] of these reasons.

167    At [50] of these reasons, I note the evidence of Mr Smith in relation to the total press clip numbers which have been copied and communicated by Isentia during the period of its interim licence. Three periods are identified that cover a total period from 1 December 2018 to 30 September 2019. The total number of press clips copied and communicated by Isentia during that period is the number at CS131. If Isentia had been required to pay CA the amount at CS2 rather than the amount at CS1, it would have paid, or have been required to pay, CA the amount at CS59 rather than the amount at CS58, the difference being the amount at CS60.

168    Mr Smith and Mr Gerstmyer say that this difference is material and irremediably prejudicial. Mr Suckling says that the difference between the rates at CS1 and CS2 is not material because Isentia has failed to demonstrate that the difference has actually resulted in the loss of a client. Although Mr Smith seeks to illustrate the point of prejudice by reference to five emblematic customers which have been lost by Isentia to, in four cases, Streem, and in one case, Meltwater, Mr Smith does not analyse each of those emblematic customers by reference to the matrix of the number of press clips in play for each customer and the role the differential press clip rate as between CS1 and CS2 played, or reasonably could be thought to have played, in the loss of a customer. Nor does Mr Gerstmyer address that matter. Both Mr Smith and Mr Gerstmyer say that their view is, based on their experience, that the amount of the difference, in the aggregate, in the per-clip rate over the period 1 December 2018 to 30 September 2019 (the amount at CS60) has made a difference in the loss of clients in the number at CS6 from Isentia to Meltwater and Streem.

169    It is necessary to look a little closer at the five emblematic examples of lost customers upon which Isentia places so much emphasis.

170    The first customer is CS9. Isentia’s best offer to CS9 was the amount at CS12. The winning bid was the amount at CS13. Had Isentia had the benefit of a per-clip rate at CS2 rather than CS1, it would have had an input copyright cost which was the amount at CS132 less than the input cost under the interim licence rate at CS1 assuming that the press clips for the customer at CS9 was of the order of the press clips suggested by Mr Suckling at CS112. That being so, Isentia would have been in a position to make a best offer of the amount at CS133 rather than the best offer at CS12. The winning bid for the customer at CS9 was the amount at CS13 which means that Isentia would have remained less favourable as compared with the winning bid by the amount at CS134.

171    The second customer is CS14. Isentia’s best offer to CS14 was the amount at CS18. The winning bid was the amount at CS19. Had Isentia had the benefit of a per-clip rate at CS2 rather than CS1, it would have had an input copyright cost which was the amount at CS135 less than the input cost under the interim licence rate at CS1 assuming that the press clips for the customer at CS14 was of the order of the press clips suggested by Mr Suckling at CS112. That being so, Isentia would have been in a position to make a best offer of the amount at CS136 rather than the best offer at CS18. The winning bid for the customer at CS14 was the amount at CS19 which means that Isentia would have remained less favourable as compared with the winning bid by the amount at CS137.

172    The third customer is CS20. Isentia’s best offer to CS20 was the amount at CS24. The winning bid was the amount at CS25. Had Isentia had the benefit of a per-clip rate at CS2 rather than CS1, it would have had an input copyright cost which was the amount at CS138 less than the input cost under the interim licence rate at CS1 assuming that the press clips for the customer at CS20 was of the order of the press clips suggested by Mr Suckling at CS112. That being so, Isentia would have been in a position to make a best offer of the amount at CS139 rather than the best offer at CS24. The winning bid for the customer at CS20 was the amount at CS25 which means that Isentia would have remained less favourable as compared with the winning bid by the amount at CS140.

173    The fourth customer is CS26. Isentia, in early 2019, secured a three year contract with CS26. However, three weeks into the new contract, CS26 terminated the contract advising Isentia that it would be acquiring services from Streem. Isentia’s offer to CS26 was the amount at CS28 (although it was Isentia’s first and only offer). The winning bid for CS26 is unknown although CS26 told Mr Smith that the price difference between Isentia’s offer and Streem’s offer was so significant that CS26 could not refuse the “Streem deal” and Mr Gurney for CS26 was not going to change his mind. Mr Smith understands that the difference between Isentia’s offer and Streem’s offer was greater than the amount at CS29 with the result that Isentia was never going to lose the contract with CS26 on the footing of a price differential in the rate for press clips as between the rates at CS1 and CS2.

174    The fifth customer is CS30. Isentia’s best offer to CS30 was the amount at CS33. The winning bid is unknown. Isentia understands the position to be that Meltwater’s price was “far below Isentia’s price” as described by Mr Smith in his affidavit at paras 61 and 62. It seems unlikely therefore that had Isentia been paying CA an input copyright cost according to the per-clip rate at CS2 rather than CS1, Isentia would have been likely to hold CS30 as a customer. There is no evidence before the Tribunal as to the number of press clips likely to have been provided to CS30.

175    It seems unlikely (and it is certainly not demonstrated) that any one of the five emblematic customers cited and relied upon by Isentia were lost by Isentia to either Meltwater or Streem by reason of the interim per-clip rate at CS1 applying as an interim input copyright cost rather than the rate at CS2, being the Meltwater rate. If the strength of the position that Isentia contends for is to be illustrated by any or all of the customers said to be emblematic of the problem Isentia confronts, the difficulty immediately seems to be that Isentia has not been able to demonstrate that any one of those emblematic customers was lost to it because it was required to pay an interim per-clip rate at CS1 rather than the rate at CS2.

176    Apart from those matters, there are two customers in the list at Exhibit “SAS-2” that suggest that factors other than price were determinative and where the difference in the per-clip rate as between CS1 and CS2 made no difference. The customers are those at CS141 and CS142. As to the customer at CS141, Isentia’s best offer was the amount at CS143 whereas the winning bid was the amount at CS144. As to customer CS142, the position is not as clear, but Isentia’s best price (CS145) was equal to the winning price (although the winning bid might have been “slightly higher”, according to Exhibit “SAS-2” than the winning bidder). Yet, Isentia was not selected.

177    One of the difficulties in reaching a conclusion about just what discrete role the difference between the already adjusted CS1 rate and the CS2 rate plays in causing customers to be lost by Isentia to Meltwater and/or Streem pending the determination of the proceeding is that the Tribunal has no evidence or understanding of the cost base of the three rivals and the role the differential rate actually plays in the matrix of costs sought to be recovered in pricing services. Perhaps the cost base of Meltwater and Streem renders them more “lean and hungry”. Perhaps automation is playing a much larger role in enabling Meltwater and Streem to bid more advantageously as compared with Isentia.

178    The Tribunal in these reasons has noted carefully the evidence of Mr Smith and Mr Gerstmyer that in winning and losing clients the differential interim rate as between CS1 and CS2, in their view, plays a critical role. However, Mr Smith and Mr Gerstmyer in expressing that view, are, in one sense, not just expressing a view but swearing the issue. When the emblematic critical examples of the problem Isentia is confronting are identified, those examples do not actually support the central proposition. Although I accept that Mr Smith and Mr Gerstmyer are experienced people engaged in the daily battle downstream of CA to win and hold customers within the field of rivalry (and Mr Suckling is not), I find it difficult to act as they would wish in exercising the discretion when the five primary nominated examples do not make the case they seek to advance and at least two other examples are against them as well.

179    Also, I do not accept that the revenue decline and the share price decline is attributable to the particular matter now under consideration, that is, the role the difference in the per-clip rate in the interim licence as between the rates at CS1 and CS2 plays in causing customers to be won or lost by Isentia in comparison with Meltwater (and Streem).

180    As to other matters, I do not accept that Isentia stood back before commencing its proceedings. It acted appropriately in the circumstances.

181    Although the parity argument is said not to take account of the special circumstances applicable to Streem, Mr Suckling essentially says that so far as the per-clip rate is concerned, Streem is (apart from “a minima”) on the same per-clip rate as Meltwater (the CS2 rate).

182    I am not persuaded that matters of impact upon budget preparation by CopyCo rightsholders is a significant matter in terms of the exercise of the discretion on the matter now under consideration, if it were to be the case that I was otherwise persuaded that Isentia had demonstrated actual irremediable prejudice arising out of the operation of the differential as between CS1 and CS2.

183    I have also had the benefit of reading the expert report, Exhibit “CJP-3”, to the affidavit of Dr Christopher Pleatsikas filed in support of the application by Isentia and the expert report, Exhibit “JPO-1”, to the affidavit of Jason Ockerby filed on behalf of CA. Although I have taken these reports into account as part of the evidence filed on the application, the reports do not assist me on the critical question of whether the differential in the rates as between the rates at CS1 and CS2 is an operative cause of Isentia either losing customers or failing to win customers in rivalry in the market for provision of media intelligence services in relation to specific customers.

184    For all of these reasons, I am not willing to further adjust the interim per-clip rate and impose a further interim reduction on CA’s revenues.

185    As to the Downstream Licence Fee, the exchanges between MinterEllison and Clayton Utz on behalf of the clients brought about a very clear resolution of the position. The parties have agreed the amount at CS67 as the “annual Downstream Licence Fee”. By that arrangement, reflected in the correspondence, the parties agreed that the CS67 amount would prevail as the annual fee governing that part of the arrangement the subject of the interim licence. A question that arises is whether the Tribunal’s intention to establish the Isentia Interim Licence for a threshold period of December 2018 and January and February 2019 with a review taking place thereafter to establish a further interim licence for the months of March, April and May 2019 and further periods thereafter, gives rise to a construction of the arrangement reflected in the correspondence such that the agreement should be construed not as an annual Downstream Licence Fee in the CS67 amount, but rather an annual Downstream Licence Fee subject to three monthly review. The correspondence speaks for itself. It addresses the position agreed to prevail as the annual fee for that part of the licence. The parties had the reasons of 16 November 2018 before them when the agreement reflected in the correspondence was struck. The correspondence does not make the agreement subject to any period of review. That was consistent with the notion that what needed to be looked at after three months is how the licence was operating in light of the per-clip rate determined by the Tribunal.

186    I am also concerned, in the exercise of the discretion, about the contended failure on the evidence before the Tribunal on the part of Isentia in performing its quarterly reporting obligations so as to enable CA to invoice Isentia for fees, secure payment of the fees and enable distributions to the rightsholders to be made. It is not necessary to examine that matter further because I am not satisfied that sufficient analysis has been undertaken by Isentia in relation to the customers so as to demonstrate that the differential in the per-clip rate between the rates at CS1 and CS2 is making the difference contended for by Isentia.

187    Accordingly, the amended application is dismissed with the question of costs reserved for later determination.

188    The remaining matter concerns the question of whether there ought to be a reference to the Full Court of the Federal Court for the determination of a question of law. That matter needs some explanation.

The referral of questions to the Full Court of the Federal Court of Australia

189    The applications to the Tribunal by Isentia, Meltwater and Streem are made under s 157(3) of the Act. Section 157(3) addresses the topic of the integers that need to be satisfied to enable a person to apply to the Tribunal where “no licence scheme” (as to which see s 136 of the Act) applies and a licensor (see s 136) refuses or fails to grant a “reasonable licence”. Section 157(3) provides that where a person claims (as Isentia, Meltwater and Streem claim) that they each require a licence, in a case to which a licence scheme does not apply (as is the case in these proceedings), and a licensor (as CA is said to be, although it says not), has “refused” or “failed” to grant the licence, or failed or refused to “procure” the grant of the licence and, “in the circumstances”, it is “unreasonable” that the licence should not be granted, the relevant person may apply to the Tribunal: s 157(3)(a). Alternatively, in circumstances where a person who claims they require a licence in a case such as the principal applications where no licence scheme applies, and a licensor proposes that a licence should be granted subject to “the payment of charges” or to “conditions” that are “unreasonable”, such a person may apply to the Tribunal under s 157 and, in particular, s 157(3)(b).

190    In such an application, the orders that the Tribunal might make, and thus the power to make orders arising out of an application to the Tribunal under s 157(3), are addressed by s 157(6B) of the Act. That subsection provides that if the Tribunal is satisfied that the claim of an applicant under s 157(3) (or s 157(2) although, relevantly for present purposes, the proceedings are concerned with an application under s 157(3)), is “well-founded” the Tribunal “must” either make an order specifying, in respect of the “matters” specified in the order, the charges, if any, and the conditions, that the Tribunal considers “reasonable in the circumstances in relation to the applicant” (s 157(6B)(a)), or an order under s 157(6B)(b). As to s 157(6B)(b), the Tribunal is conferred with the power, where it is satisfied that the claim of an applicant under s 157(3) is well-founded, to order that the applicant be “granted a licence in the terms proposed by the applicant, the licensor concerned or another party to the application”.

191    Where the Tribunal is satisfied that the applicant’s claim under s 157(3) is well-founded, it must make an order under either (a) or (b) of s 157(6B).

192    The contextual circumstances, in which a proposal by Isentia, Meltwater and Streem to refer questions of law to the Full Court of the Federal Court for determination, are these.

193    CA discharges a number of roles under the Act. CA is a declared collecting society for the purposes of Part IVA, Division 4 of the Act in relation to statutory educational licences in works (other than a work included in a sound recording or a cinematograph film). It is a declared collecting society for the purposes of Part VII, Division 2 of the Act in relation to statutory government licences of works and published editions of works (other than works included in a sound recording, cinematograph film, or a television or sound broadcast). However, in the applications under s 157(3), CA is not engaged in its statutory role as a declared collecting society. The rights licensed by CA to each of Isentia, Meltwater and Streem, are licensed on a non-exclusive and voluntary basis.

194    The rights licensed by CA to each of those entities find their source upstream of CA.

195    The immediate upstream source is an Agency Agreement between CopyCo and CA. Particular publishers including News Limited and Fairfax Digital Pty Limited (recognising that the Fairfax works are now controlled by the entity described in these reasons as Nine Publishing) and at least three other publishers are shareholders in CopyCo. Historically, those publisher shareholders, together with five other publishers, have, since March 2000, granted CopyCo a non-exclusive licence to sub-licence specified rights in certain publications. The publishers that have taken that step are described as CopyCo publishers. CA’s right to grant licences in respect of copyright owned or controlled by a CopyCo publisher is conferred under the Agency Agreement between CopyCo and CA. Under that agreement, CA has the right to sub-licence those licensed rights and it has an obligation, under the Agency Agreement, to collect fees in respect of each sub-licence and an obligation to distribute the proceeds of those licence fees. Some publishers who are non-CopyCo publishers, have conferred rights upon CA to sub-licence rights in their works to media monitoring organisations.

196    It can be seen therefore that there is a particular continuum which is relevant to the present applications under s 157(3). It starts with a publisher who owns the copyright in a relevant work. It involves the conferral of a licence by such a publisher upon CopyCo to grant particular (specified) rights subsisting in the relevant work (licensed rights). It involves the appointment by CopyCo of CA as CopyCo’s agent for the purpose of granting sub-licences of the licensed rights to others which, relevantly here, involves media monitoring organisations. Thus, CA’s standing is one of an agent, standing in the shoes of CopyCo, to grant sub-licences of licensed rights in particular subject matter. It can readily be seen, as the letters from MinterEllison dated 23 January 2020 and 5 February 2020 (at pp 5 to 7 of Exhibit “TGG-1” to the affidavit of Mr Gerstmyer) reveal, that a particular publisher might, at any moment in time, elect to withdraw from CopyCo the specified licensed rights in particular publications thus depriving CA of the power to grant sub-licences of the withdrawn licensed rights. Those withdrawn rights would rapidly become excluded rights or excluded publications for the purposes of the licence between CA and each MMO.

197    It follows that Meltwater, in particular, but also Isentia and Streem, are concerned that they might prosecute their proceedings before the Tribunal to demonstrate, for the purposes of s 157(6B), that the claim made under s 157(3) is “well-founded” so as to seek to establish a licence, by order of the Tribunal, which specifies the charges and conditions that the Tribunal considers reasonable in the circumstances in relation to each applicant, to find that the victory in such a claim is a pyrrhic victory because publisher rightsholders have simply withdrawn the licensed rights in publications from CopyCo, thus collapsing CA’s standing to confer sub-licences and ending each MMO’s standing as a sub-licence of the licensed rights. Each of Isentia, Meltwater and Streem are right to be concerned about the ultimate consequences for each of them arising out of the publisher/CopyCo/CA rights supply chain at the end of which they sit as a sub-licensee.

198    Withdrawal of the licensed publications is precisely what has happened as reflected in the two letters from MinterEllison earlier mentioned where News Corp has given notice of the withdrawal from CopyCo of the licensed rights in The Australian and The Weekend Australian as from 20 March 2020 and Nine Publishing has given notice of withdrawal of the licensed rights as from 17 January 2021 in The Australian Financial Review, The Financial Review Smart Investor, The Financial Review BOSS, The Australian Financial Review Magazine and The Weekend Financial Review. The publications controlled by News Corp and Nine Publishing are significant press publications.

199    Accordingly, questions arise about whether the Tribunal has power to make orders to grant licences in the particular circumstances reflected in the proposed questions. It is necessary to mention some further background matters in relation to the proposed questions.

200    Under the Agency Agreement, CopyCo has appointed CA to grant sub-licences to exercise specified rights in particular works (comprising a printed edition of a newspaper, magazine or similar periodical; and an electronic edition of a newspaper, magazine, website or other electronic news service (other than a journal)), otherwise described as the Licensed Works. Prior to the commencement of each of the proceedings by Isentia, Meltwater and Streem, CA offered each applicant a licence on particular terms otherwise called the CA Licence. Each applicant proposed a licence on different terms to the CA Licence. Each applicant seeks an order under s 157(6B)(a) or (b) of the Act in respect of the licence each of them has proposed. The licence proposed by each applicant includes rights which CA says it is not authorised by CopyCo to grant. Those rights are the rights described at CS146. CA simply says that no licence can be granted by the Tribunal which engages with those rights which CA does not have the power to grant under the Agency Agreement because CopyCo has simply not authorised CA to grant those rights.

201    Having regard to all of these matters, Isentia, Meltwater and Streem seek to refer five questions for determination by the Federal Court under s 161(1) of the Act. That section provides that the Tribunal may, of its own motion or at the request of a party, refer a question of law, arising in proceedings before it, for determination by the Federal Court. The questions will be determined, if referred, by the Full Court of the Court.

202    The questions are these.

(1)    In circumstances where CA has proposed the CA Licence, then, with the exception of charges and conditions which may be specified or varied by the Tribunal, is the form of the licence that may be ordered by the Tribunal under s 157(6B) limited to the terms of the CA Licence?

(2)    If the answer to Question 1 is “yes”, which terms of the CA Licence are neither charges nor conditions and thus outside the power of the Tribunal to vary?

(3)    In an application brought under s 157(3) of the Act, does the Tribunal have the power:

(a)    under s 157(6B)(b) of the Act, to order that the applicants be granted licences on all the terms of the proposed licences; and/or

(b)    under s 157(6B)(a) of the Act, to make an order specifying the charges, if any, and the conditions that it considers reasonable in the circumstances in respect of each of the proposed licences?

(4)    See CS147.

(5)    If the answer to Question 3(b) is “no”, with respect to which (if any) of the rights and terms referred to in Question 4 is the Tribunal not empowered to make an order pursuant to s 157(6B)(a)?

203    In aid of the request of Isentia, Meltwater and Streem to refer these questions to the Federal Court, the parties have formulated a stated case. The stated case is supported by a folder of documents to which the Full Court would turn should there be any contest about any underlying matter which might require examination by reference to the documents.

204    Put simply, the difficulty I have with the proposal to refer the five questions, together with the documents, is that my expectation, having regard to the debate that has taken place before me between the parties to date, is that contentions are likely to arise about underlying aspects of the documents or factual questions which might well need to be resolved before the questions can be answered by the Full Court of the Federal Court. I am apprehensive that there is a serious risk that a reference to the Federal Court and thus to the Full Court might miscarry due to such a controversy emerging with the result that the reference might, for one reason or another, “go off”. Accordingly, I propose to refuse to refer the questions to the Federal Court. Rather, I propose to set aside the questions as separate matters to be dealt with by the Tribunal. I propose to deal with these questions at the earliest possible opportunity, hear the parties and answer the questions as a matter of urgency. If there is to be an appeal from the Tribunal’s decision, a Full Court can be convened quickly to deal with any appeal arising out of a determination of the separate question. Moreover, the determination of the separate question and any urgent appeal arising out of that determination ought not to disrupt progression of the preparation of the matter to a hearing in October (which is over five months away). I propose to hear the separate question at a time convenient to the parties within the first three weeks of May.

205    Accordingly, the parties are requested to advise my Associate as soon as possible of their availability for the hearing of the separate questions.

206    In an attempt to overcome the difficulty arising out of the particular set of circumstances reflected in the matters described at [194] to [196] of these reasons, the dilemma arising out of the matters described at [197] and [198] of these reasons, and the proposition that CA is not authorised under the Agency Agreement with CopyCo to grant sub-licences to media monitoring organisations for the scope of rights they seek by the licences they have proposed, the Tribunal sought to establish a position where, for the purposes of these applications, CopyCo would agree to confer upon CA the field of rights sought by the applicants so that the question would become simply one of whether the charges and conditions are reasonable or unreasonable. Such a conferral, transactionally, for the purposes of these three applications might also involve the publishers granting an expanded field of specified rights to CopyCo to enable CA to grant an expanded field of sub-licence rights, under the Agency Agreement, to each of the applicant media monitoring organisations. The Board of CopyCo met to consider that matter. It has refused to transactionally expand the scope of CA’s Agency Agreement and I infer that the publishers have refused to grant CopyCo an expanded field of rights which would enable CopyCo to expand the scope of the Agency Agreement.

207    Having regard to all of the issues raised by the three applications which are to be heard together and the matters I have already mentioned in these reasons, the Tribunal proposes to seek the views of the Australian Competition and Consumer Commission (“ACCC”) as to whether it proposes to ask, for the purposes of s 157B of the Act, to be made a party to the applications.

208    One remaining matter concerns directions which ought to be made for the further conduct of the applications. I have already indicated that the parties are requested to advise my Associate as to their availability for the hearing of the separate questions. The parties are also directed to conduct discussions with a view to proposing to the Tribunal directions for the further conduct of the applications. Those directions will take into account the steps involved in preparing for the hearing of the further questions. The parties are requested to submit proposed directions by the end of April but preferably by 4.00pm on Monday, 27 April 2020, if possible. The possible, and likely, joinder of the ACCC is not a matter which should be thought to involve any delay in deciding directions for the future conduct of the matter. Any joinder of the ACCC will take its course.

Associate:

Dated:    22 April 2020