J C Williamson Ltd v Metro-Goldwyn-Mayer Theatres Ltd [1937] HCA 12; (1937) 56 CLR 567 (23 March 1937)

J. C. Williamson Limited Plaintiff, Appellant; and Metro-Goldwyn-Mayer Theatres Limited and Another Defendants, Respondents.

This is an appeal by special leave from the judgment of the Full Court of Victoria reversing a judgment of Mann C.J. upon a special case. The learned Chief Justice gave judgment in favour of the plaintiff. The determination of the questions asked in the special case depends upon the interpretation of an agreement dated 16th September 1924 under which the owner of all the dramatic and performing rights in and to a musical play entitled "Rose Marie" granted to the plaintiff the sole and exclusive right, licence and privilege to produce and perform the play throughout Australia and New Zealand and South Africa upon the terms and conditions of the agreement. The agreement contained this provision:

In another clause it was provided that "the party of the first part reserves from this contract all motion picture film rights of the said play Rose Marie." One defendant proposes to produce a talking picture of the play and the other defendant proposes to supply and distribute films for that purpose. The plaintiff instituted an action claiming an injunction. The special case submits the following questions for the determination of the court:—

The facts stated in the special case show that what is known as a talkie picture may be produced by passing through a machine a film which includes both photographs of scenes and what is known as a sound track at the side of the photographs. A light behind the film projects the picture images upon a screen and the action of a special light upon the sound track causes words, music and sounds to be reproduced so that, in the case of a play, the audience both sees and hears the play. In the year 1924, when the agreement was made, both parties to the agreement knew that silent pictures were being made and exhibited commercially for the purposes of profit, and that sound films had been made and had been publicly exhibited but had not then become of commercial importance.

Mann C.J. held that the expression "motion picture film rights" was limited to rights in connection with motion pictures in the ordinary sense of the word "pictures" as visual reproductions, and that it did not cover aural reproductions. In my opinion this decision was right. The Full Court reversed the judgment of Mann C.J., holding that the right to reproduce by means of a film both action and sound synchronously fell within the description of "motion picture film rights." In the judgment of the Full Court it is stated that the learned Chief Justice emphasized too greatly the word "picture" in this composite phrase and too little the word "film." The Full Court also based its judgment in part upon what the members of the Full Court regarded as the strange result of taking the opposite view, namely, the result that the right to produce a silent motion picture would be in one person and the right to produce (by means of a film) sounds accompanying such a picture would be in another person.

I am unable to attach great weight to the latter argument. It is an argument from convenience which should not affect the interpretation of language unless there is an ambiguity in the words which cannot be resolved by applying ordinary principles of construction. But in my opinion there is nothing particularly strange in the result mentioned. Rights of copyright are of several kinds and they can be and frequently are divided in ownership, e.g., one person may have the sole right to reproduce a musical work by making gramaphone records and another person may have the sole right of performing that musical work in public. In such a case a public performance by means of gramaphone records can be given only by co-operation of the two persons. It is common knowledge that in the case of scenic and educational films, news films, and many others, the pictures are obtained or produced separately from the descriptive account or comment which may accompany the exhibition of the pictures. A sound film can exist by itself quite independently of any motion picture film. In the present case there would be nothing very surprising if a silent motion picture of Rose Marie could be given only by one party and a "talkie picture" only by co-operation of both parties. It has been urged that the right to use the sound track separately from the right to show accompanying visual pictures would be so useless that such a separation of rights could not be considered to be within the contemplation of the parties. I am unable to agree in this contention. By the use of a sound track a complete speaking and singing presentation of the play may be given, as is frequently done in the broadcasting of plays.

It is, however, unnecessary to advert to any of these considerations if the words of the contract are unambiguous. The parties are bound by the natural meaning of the words which they have used even if the result may be unexpected. The phrase to be considered is "motion picture film rights." In the first place it is clear that the rights reserved by this phrase are confined to film rights. No right which is not connected with the production, sale or use of a film is included within the phrase. But it is equally true that the rights covered by the words are confined to picture rights. There is no reason for emphasizing one part of the phrase rather than another part of the phrase. The films to which the reservation in the agreement relates are films so far, but only so far, as they can properly be described as picture films and not so far as they serve other purposes than that of producing pictures. Further, the only picture rights which are reserved are "motion picture" rights. A production of sound cannot properly be described as a motion picture. A motion picture is what used to be called an "animated" picture as distinct from a still picture. The word "motion" refers to visually perceived motion. It does not appear to me that the word can properly be applied in any sense to sound productions.

It is true that in the case of many talkie films the sound track happens to be upon the same film as the photographs which are used in producing the visual pictures. This, however, is by no means necessarily the case, as is shown by examples which I have already given. If the sound track were on a separate film which was shown synchronously with the visual picture film, it could not have been contended that the sound film was part of the picture film. If two such films were fastened together for simultaneous use, they would still be essentially different things producing essentially different results. If this were done the circumstance that the sounds could be presented to the same audience at the same time as the pictures could not have been relied upon for the purpose of including the sound film within the denomination "motion picture film." It is conceivable that by the progress of invention other senses than those of sight and hearing might be stimulated by the public exhibition of a film. But it would not follow that the whole film, producing visual and other sensations, could therefore properly be described as a motion picture film.

I am therefore unable to agree with the decision of the United States Circuit Court of Appeals in L. C. Page & Co. (Inc.) v. Fox Film Corporation[1]. In that case it was held that in a particular agreement the words "moving picture rights" did include rights with respect to sound films. The learned judge who decided the case said "Talkies are but a species of the genus motion pictures; they are employed by the same theatres, enjoyed by the same audiences and nothing more than a forward step in the same art. Essentially the form and area of exploitation were the same." In my opinion the facts mentioned by the learned judge do not justify his conclusion. The fact that the same audience in the same theatres enjoyed both moving pictures strictly so called and sound films does not show in any way that the sound films are a development or a forward step in the art of moving pictures. The addition of a new element, namely, sound, is very important in relation to moving pictures, but it is the addition of a different feature and not a development of a formerly existing feature. The difference between a picture which appeals only to the eye and a reproduction of sound which appeals only to the ear is, in my opinion, a difference in kind: neither can be regarded as merely accessory to, or as a development of, the other.

On the other hand I agree with the reasoning in Pathé Pictures Ltd. v. Bancroft[2]. In this case Swift J. was called upon to interpret a contract which, after referring to cinematograph films and cinematograph rights, granted a sole and exclusive licence to produce a particular work in "moving picture films." It was held that the distinction drawn between cinematograph films and moving picture films justified the conclusion that in that agreement the phrase cinematograph films was used to include other than moving picture films. That circumstance does not exist in the present case, but the learned judge in considering the meaning of the words "moving picture films" drew a clear distinction between reproduction of a play in moving pictures and reproduction of a play in recorded voice films. He said: "It is inappropriate language to talk of picturing the voice. You record it, you repeat it, you announce it, you deliver it; but you do not picture it. When you picture a thing it is something which is called to the eye of the imagination which may picture something; but nobody ever pictures the human voice; they hear it; and if it has been recorded, it is repeated to them." In my opinion this statement fairly states the common use of language and I respectfully agree with it.

In my opinion the appeal should be allowed and the judgment of the learned Chief Justice should be restored.

This appeal arises out of an action brought quia timet for infringement of copyright. The plaintiffs, who are the appellants, claim to be the owners of the performing right, except the motion picture film rights, in a musical play. They seek to restrain the defendants respondents from exhibiting sound films. They say that the exception covers silent films only and does not extend to the exhibition of sound films. The agreement conferring the appellants' rights and containing the exception was made in September 1924, before talking pictures had taken the place of silent films. Their contention is based on this fact considered with the manner in which the agreement, particularly the exception, is expressed.

The parties are agreed that, at the time of the contract, silent films were the only motion picture films being manufactured or exhibited which were of commercial importance. Experiments had then been made to discover a method of combining the synchronous reproduction of sound with the projection of moving pictures and many patents had been obtained for apparatus for the purpose. The devices included the photographic recording of sound upon film so as to reproduce the sound simultaneously with the visual image. Experiments of this kind had been conducted and sound pictures so made had been discussed in the public press in the United States and a few such pictures had been publicly exhibited in various picture theatres in New York as items in programmes of both sound and silent pictures. The parties to the agreement were interested in the business of providing public entertainment and knew all this.

The agreement appears to have been made in New York. Under it the respondents, who are an Australian company, took the sole and exclusive right, licence and privilege to produce and perform the musical play in Australia, New Zealand and South Africa. The consideration was the final payment of a lump sum and a royalty consisting of a percentage of the gross receipts of each and every performance of the musical play given by the appellants. But the lump sum was to be applied towards satisfaction of the royalties. All publishing rights were expressly reserved by the grantors. The exception of motion picture film rights was made by two clauses. One of them provided that it was specifically understood and agreed that the contract in no way included the motion picture film rights to the musical play which were expressly reserved by the grantors. The other clause stated that the grantors reserved from the contract all motion picture film rights of the play, but agreed not to sell or lease any of the said motion picture film rights or authorize the manufacture or exhibition of the said subject in Australia, New Zealand, or South Africa until two years after the signing of the contract by the appellants. There is, of course, no dispute that if it were not for the exception or reservation the grant of the general performing right would cover the exclusive right to exhibit motion pictures, whether silent pictures or sound pictures. The question, therefore, turns upon the extent of the exception.

In the Supreme Court of Victoria, Mann C.J. took the view that the reproduction of the work in sound was not within the exception or reservation and, therefore, that the exhibition of a talking picture involved an infringement of the appellants' rights.

The Full Court, consisting of Lowe, Gavan Duffy and Martin JJ., reversed his decision and held that the reservation covered sound pictures as well as silent films. We agree in their opinion.

The intention of the agreement appears to us to be to make a reservation in favour of the grantors of so much of the exclusive performing right as would allow the exploitation of the commercial exhibition of moving pictures as practised at the time and as it might be developed or improved during the life of the copyright. The appellants took the general performing right, which would enable them to produce the musical play in Australia, New Zealand and South Africa, and a protection for two years against such competition as would arise from the exhibition in those countries of the films made in America or elsewhere out of elements or materials constituting the play. But we do not think that they were meant to obtain any right themselves to exhibit or, after the two years, exclude others from exhibiting the mechanical products which then formed or might thereafter form the ordinary means of conducting the moving-picture business.

The agreement must be construed in the light of the circumstances and conditions attending the matters upon which the agreement was to operate, and it is conceded that a knowledge of the relevant circumstances and conditions was common to the parties. The combination of sound with the visual exhibition of films was then threatened. Whatever opinions they may have held about the probability or imminence of the development so threatened, the parties to the contract knew that if it took place, it would or might affect the regular business in the production and exhibition of moving pictures and do so in a very important manner. The simultaneous oral and visual mechanical reproduction of the play by means of films could not be regarded as so entirely different from the exhibition of motion pictures as then commercially practised that it would altogether fall outside the reservation and form part of the general performing right granted to the appellants. So far as it was visual, such a reproduction would, we think, necessarily involve an exercise of or an infringement of the motion picture film rights reserved or excepted and the parties must be taken to have so understood. Upon the appellants' view the only alternative is that the agreement divides the right to exhibit sound films between the parties to it. That they entertained an actual intention to do so seems to us to be very unlikely.

One of the chief considerations relied upon in opposition to the view taken by the Full Court, and shared by us, is the use of the word "picture" in the expression "moving picture film rights." We quite concede that the sounds produced at the exhibition of a talking film cannot be described as pictured or as a picture. But the whole expression is a compendious description of that part of the copyright in the play which relates to films by which moving pictures are produced. When the purpose of the reservation and the state of the art are considered, it appears to us that those rights necessarily included the privilege or monopoly of every form of mechanical reproduction or exhibition which developed in the business of entertainment by motion picture films. Sound pictures appear to us not only such a development but one necessarily within the proximate contemplation of the parties.

[1] (1936) Unreported.

High Court of Australia

J C Williamson Ltd v Metro-Goldwyn-Mayer Theatres Ltd [1937] HCA 12; (1937) 56 CLR 567 (23 March 1937)

HIGH COURT OF AUSTRALIA