The introduction in 2003 of section 44C and related sections amended the Copyright Act 1968 (Cth) to block the proliferation in parallel importation circumstances of silly claims to copyright in mere product labels.
Parallel importation is the importation of non-counterfeit goods into Australia by persons who are not licensed or otherwise authorised by the intellectual property owner. Typically the intellectual property in these goods is a trade mark or subject matter protected by copyright law. Parallel imports are sometimes called "grey" goods.
A background to the amendments provides a context for understanding how a label exception to copyright was created.
From the 1980s there was a proliferation of infringement of copyright claims in circumstances involving parallel importation of consumer goods. These were not claims to the traditional types of subject matter to which copyright applied, eg books, films and sound recordings.
An example was the Bailey's Irish Cream case - RA & A Bailey & Co Ltd v Boccaccio Pty Ltd (1986) 6 IPR 279. This case was against an importer who was not the official authorised Australian distributor. The importer was found to be not in breach of trade mark law but to be in breach of copyright law for importing Bailey's Irish Cream without the authorisation of the intellectual property owner of that product. The claim against the importer was founded on the existence of the claimed copyright in the label on the drink bottles.
As legal as it was, the case offended many. This was especially so because it was part of a line of cases which were bald attempts to use copyright law to prevent trade in legitimate imported products. These products were not pirate goods. They used labels with intellectual property and the original use of those labels had been authorised by the intellectual property owner.
The copyright amendment introduced changes to the law which are overviewed below by considering three sections of the Copyright Act.
The definitions section of the Copyright Act, section 10, was amended. A definition of "accessory" was added which among other things now includes “a label affixed to, displayed on, incorporated into the surface of, or accompanying, the article” and “a label affixed to, displayed on, incorporated into the surface of, or accompanying, the packaging or container in which the article is packaged or contained”.
Also, section 44C was added, headed "Copyright subsisting in accessories etc. to imported articles". The section states: "The copyright in a work a copy of which is, or is on, or embodied in, a non-infringing accessory to an article is not infringed by importing the accessory with the article.”
For example, section 44C might be said to apply when the subject matter of a claimed copyright:
comprises a label;
the label (using the section 10 Copyright Act definition) comprises "non-infringing accessories" (eg they are "affixed to… the surface of… the article", namely the product); and
such "non-infringing accessories" contain words or devices that are used as trade marks or are registered trade marks.
Section 44C was interpreted in Polo/Lauren Company L.P. v Ziliani Holdings Pty Ltd  FCAFC 195 (18 December 2008). The Ziliani case quotes a Copyright Law Review Committee's report which in referring to the Bailey's Irish Cream case states: "The purpose of copyright is to protect articles which are truly copyright articles such as books, sound recordings or films" [ie it is silly to accept claims to copyright in labels alone]. Further, section 44C is in line with the rationale that copyright claims to a label may exist for an owner, but if the owner consents, authorises or licenses it to be affixed to an article then the owner's rights are exhausted.
In Ziliani at 22, the court observed that "...it is not sufficient for present purposes to demonstrate that the Logo is an important element in, or an integral aspect of, the garments. It is only when the label and the labelled are conceptually indistinguishable that the former loses its quality as a label. However important or integral the Logo is to the garments, it and they remain distinct."
Section 198A of the Copyright Act is another part of the amendment made to the law. It is headed "Non-infringement of trade mark in relation to the importation of copyright material". Section 198A provides that in certain circumstances the importation of copyright material bearing a registered trade mark does not infringe the trade mark. Under section 198A(1)(a) such a circumstance is where a section 44C Copyright Act defence is available.