Apple, Oz TV firm copyright mediation fails

After months of mediation has failed, an Australian TV producer has returned to the Federal Magistrates Court in an attempt to hold Apple to account for copyright infringement via an application offered on the iTunes store.

If the company, Jigsaw Entertainment, wins the case, Apple could be forced to more closely vet all third-party software sold through its iTunes Store for copyright infringement.

The case centres on the Chopper Soundboard app, created by a Melbourne teenager identified only by the handle "TheKeeganator", that was on sale for around two or three weeks in mid-2010. During that time it became Australia's top-selling iPhone app in the entertainment category, and one of the country's top five selling apps overall.

The app included sounds and images of actor Heath Franklin's parody of celebrity ex-criminal Mark "Chopper" Read, taken without permission from the Jigsaw TV series The Ronnie Johns Half Hour.

"What we're saying is that Apple breached our copyright by selling it, and also engaged in misleading and deceptive conduct in making it look like we had endorsed the product, which we hadn't," Jigsaw chief executive Nick Murray said last week.

"One of the issues for us is that there's a massive lost opportunity for us in someone else having put an app up too cheaply that was bad quality," Murray said. "Cash and an apology would do well."

Chopper Soundboard sold for US$0.99, and Jigsaw estimates that 10,000 to 20,000 copies were sold.

Jigsaw will not be suing the schoolboy developer himself, however. "He clearly didn't mean to rip us off. I've had a chat to his father, the father [was] very apologetic, and I don't want to see him get into any more trouble than he probably already is," Murray said.

Murray said Apple's original reaction was to ignore Jigsaw's email. After eight days, Apple forwarded Jigsaw's email to the developer, with the app eventually taken offline by the developer's father. It took almost two months after that before Apple responded to Jigsaw's legal demands. Murray described Apple's process as "appalling" and "arrogant".

"We can get an infringing piece of footage taken off YouTube very, very quickly, within an afternoon really," Murray said, "whereas Apple are taking, you know, 40 times longer than that."

Murray even claimed that Apple's lawyers said its app store was run on a non-profit basis as a public service, presumably in an attempt to convince Jigsaw to drop the case.

"That's absolutely not true," Murray said, pointing to Apple's recent announcement that it had paid out $2 billion to developers. "Based on the 30 per cent commission that they take, they've made $860 million profit out of apps."

After a month of court-ordered mediation, Jigsaw and Apple have failed to reach an agreement. The case returns to the Federal Magistrates Court tomorrow, 15 March, where it is expected that arguments will focus on document discovery, the confidentiality of Apple's proprietary information, such as sales figures, and amending Jigsaw's statement of claim.

"We're confident we're going to win, and Apple will end up being found to be a copyright infringer," Murray said.

Whether Jigsaw wins or loses will come down to whether Apple knew or had any reason to believe there was any copyright-infringing material in the app, according to Kay Lam-Beattie, principal of IdeaLaw, a firm specialising in intellectual property law in the IT industry.

Apple's developer agreement for iPhone and iPad apps requires developers to warrant that they have the right to publish all the material in their software. The legal question is therefore whether it is reasonable for Apple to simply take the developer's word at face value, particularly when it's clear from the app's description that the material was sourced from a TV program.

"If the developer says that they have permission, then does Apple have to take that further step of saying, 'No, no really it doesn't look kosher. Show us some evidence that you have actual permission'?" Lam-Beattie said.

A further complication in this case is the fact that the developer of Chopper Soundboard was a minor, and technically can't enter into a contract with Apple.

For Apple, there's a lot at stake. "They have to fight it, because if they lose it they have to go back and audit every iPhone app, everything that they're uploading, everything that they're distributing through all the channels," she said. "It goes much further than just mobile apps. It goes to any software distribution."

Apple has declined to comment on the case.