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Court Cases

Court Cases on the Export Grant Scheme Involving Intellectual Property

Intellectual Property has proven a difficult fit for an Export Grant scheme designed with the export of goods primarily in mind. There has been a number of landmark Court decisions considering the relevant sections of the Export Market Development Act as it applies to the export of intellectual property. 

Nomad Films International Pty Ltd v Export Development Grants Board (Austrade) 

Prior to this landmark 1986 decision, Austrade's view was that only a copyright owner could lodge and receive export grants. Under this decision of the full Federal Court, it was held that should a copyright owner appoint an exclusive licensee of copyright, then the exclusive licensee of copyright was entitled to lodge and receive an export grant to the exclusion of the copyright owner. It was also held that the licensee could be a licensee in respect of one of the bundle of copyright rights held. Copyright may be held in a song, in a film, in a sound recording, in a literary work.  Provided that the rights are held as an exclusive licensee in respect of one of the above rights, this would be sufficient to lodge and receive an export grant. Rights could also be held in respect of trademarks and other intellectual property such as know-how. 

Film Funding and Management Pty Ltd v Austrade

This is a 1989 decision of the Federal Court. It was held that a licence to market a copyright must be an exclusive licence of the copyright. In the film industry it is common that a distributor will hold a licence to market the film, but this decision held that this may not be sufficient to enable an export grant to be claimed. In general terms the exclusive licensee of copyright or owner of copyright is the only person who can claim an export grant. A licence to market a film is not a licence sufficient to lodge and receive an export grant. The decision of Nomad Films International was accepted and followed by the Court.

Hot Shoe Shuffle v Austrade

In this 1997 decision, performer/producer David Atkins lodged a grant application for marketing costs incurred in staging the musical "Hot Shoe Shuffle" in London. It was held that the costs were eligible to be claimed, on the basis that David Atkins' company Hot Shoe Shuffle held the rights to stage the musical and that it incurred the marketing costs to promote the sale of the musical to third party producers for productions in other overseas markets. Austrade had refused to pay the grant on a number of grounds, one of which was that the amount spent was not reasonable. The Tribunal held that the disallowance of expenditure on the basis that it was unreasonable, should be only on the basis that "no Court should seek to replace the individual's judgement with his own" and "one must ask whether the promotion or marketing expenditure was agreeable to reason, or whether having regard to the purpose for which it was incurred, it was irrational, absurd or ridiculous".

Australian Trade Commission v Disktravel

This 1999 decision of the Full Federal Court involved the export of computer software. A company had developed software, which was used to create a travel and tourism advertising system, utilising CD technology. The CD's created a comprehensive database of travel and tourism information, known as the travel vision system. The intention of the exporter was to licence the rights to the "platform" and to build a local database for each country and in turn obtain revenue from sale of advertising on the system. It was a business of electronic publishing and distribution using third party experience and expertise to provide the necessary information for participating countries. There would be sub-licence fees and royalties obtained from various overseas markets for the use of the intellectual property.

In the judgement, the Court  endorsed dicta in Parker Pen and Miller Poahan Coal in determining the purpose for expenditure to be incurred. It noted that although Parker Pen said the purpose "must be someone's purpose", it also noted that "if objective facts cast doubt upon the credibility or reliability of a statement, then it is up to the Court to consider all the circumstances and include whether the requisite purpose had been established. Objective facts are usually more reliable then statements of purpose intent or state of mind".

The Court then considered whether there was in existence eligible industrial property rights (intellectual property) for the purpose of the Export Grant legislation. It was noted that computer programs are protected under the Copyright Act as a literary work. It was noted that the company claiming the grant had acquired a distribution right from the originating owner of the intellectual property and that part of this distribution right authorised it to distribute discs to travel agents. It was noted however, that it did not acquire any copyright, nor did the agreement authorise this company to dispose of any rights comprised in the copyright. There was therefore no right comprised in the relevant copyright set out in the licensing agreements, which enabled the company to lodge and receive an export grant based on the export of intellectual property. It was noted that although the export grant claimant failed to establish eligible industrial property rights, the Court left open the question of whether it was disposing of eligible know-how.

French J in analysing the decision of Nomad Films and Film Funding Limited felt that in relation to copyright, ownership meant an exclusivity of right, the exclusive right to do something. He felt that ownership meant the rights held to the exclusion of others, which are capable of sale or grant or assignment or supply. In his Honour's view, copyright in relation to works as eligible rights, refers to the right to undertake all or any of the acts comprised in copyright. He felt the proper construction was closer to the judgement of Northrop J in Nomad Films. He noted that in the facts of the case, the income to be gained by the exporter was income from advertising fees. Although noting the arrangements where the discs were supplied to travel agents may amount to a rental right under the Copyright Act, the drafting of the agreements do not reflect this. His Honour felt that despite references to copyright in the licence agreement, no right to exclusively undertake an act of copyright under the Copyright Act could be identified as passing to  the claimant. With no eligible intellectual property right able to be disposed of,  there was no basis to claim an export grant.


In summary, all of the above case law confirms that for an exporter to lodge an export grant based on the disposal of intellectual property, an exclusive licence of one of the rights comprised in copyright must be held with an intention to dispose of that right to a third party overseas. An economic interest in copyright such as a marketing or distribution right, even if that right is held to the exclusion of all others, will not be sufficient to ground a successful export grant application.