The pitfalls of 'shopping around' in the pursuit of building the great Australian dream came to light in the recent District Court of Queensland decision Look Design and Development Pty Ltd v Edge Developments Pty Ltd & Flaton  QDC 116.
In this case, a couple seeking to build a home (the Flatons) were found to have infringed the copyright of house plans prepared by Look Design and Development Pty Ltd (Look Design) when they authorised another homebuilder, Edge Developments Pty Ltd (Edge), to modify and use those plans. However, only nominal damages were awarded against the Flatons because Look Design failed to show that it had suffered any loss.
Before building their home, the Flatons consulted with Look Design, a project homebuilder, about the design of their dream home. Look Design presented the Flatons with their 'standard plans', which they then amended to incorporate the Flatons' preferences. Look Design then produced a series of plans in accordance with the Flatons' instructions. Once the Flatons were satisfied with the plans, Look Design began discussing the price of constructing the house according to those plans.
At around this time, the Flatons approached and engaged Edge, another project homebuilder, to construct the house. Edge made minor changes to the plans prepared by Look Design and proceeded to build the Flatons' home.
The Court proceeding
Look Design commenced a claim against both Edge and the Flatons for breach of copyright. Early in the proceedings, Edge settled its case with Look Design with a payment of $30,000, but the case against the Flatons continued to trial.
District Court Judge Long SC found that Look Design did have copyright in the plans that it produced, even though the plans were adapted from 'standard' plans prepared with a computer drafting program, and were 'rudimentary' in nature (not being fully dimensioned). His Honour noted that it was clear that the preparation of the plans required time, effort and skill on the part of the draftsman employed by Look Design, and that this supported the finding that the plans were an "artistic work" under the Copyright Act 1968 (Cth) (Copyright Act).
Given the correlation between the Look Design plans and the plans used by Edge, Judge Long SC determined that there had been substantial reproduction or copying of the Look Design plans.
Because of the pre-trial settlement agreement between Look Design and Edge, His Honour was not required to make a finding in relation to whether Edge had infringed Look Design's copyright in the plans. Instead, His Honour had to consider whether the Flatons had infringed Look Design's copyright by authorising Edge to reproduce the Look Design plan in material form, both in the form of the adapted plans and the house built on the Flatons' land.
Section 36(1A) of the Copyright Act provides that, in determining whether a person has 'authorised' the infringing conduct, the court must take into account:
- the extent of the person's power to prevent the doing of the infringing act
- the nature of any relationship existing between the person and the person who did the infringing act
- whether the person took any reasonable steps to prevent or avoid the infringing act.
His Honour found that it was clear the Flatons had provided the Look Design plans to Edge for the purpose of substantial reproduction, and it did not matter whether or not the Flatons had any power to prevent Edge from substantially reproducing the plans.
The Flatons gave evidence that Edge had assured them that they only needed to modify the plans by 10 per cent to avoid infringing copyright, and that the plans had been modified accordingly. His Honour was not persuaded by this evidence and found that the Flatons had infringed Look Design' copyright by authorising the substantial reproduction of the plans.
Look Design sought compensation for the loss of the opportunity to profit from the construction of the Flatons' house and additional damages pursuant to section 115(4) of the Copyright Act.
Look Design contended that it would have made a $40,000 profit had the Flatons chosen to build with them. Accepting that any compensation it was entitled to for lost opportunity should be reduced by the $30,000 paid pre-trial by Edge, Look Design claimed $10,000 in compensation.
His Honour found that Look Design had not suffered any damage resulting from a loss of opportunity. Instead, he held that it was clear on the evidence that the Flatons were never going to build their house with Look Design, regardless of whether they infringed Look Design's copyright or not, and that the Flatons were never precluded from seeking another builder to construct their house according to a similar design.
His Honour also found that Look Designs would not have sold or licensed the plans to another builder, and could not be compensated for a loss of opportunity on that basis.
Section 115(4) of the Copyright Act allows the court, in its discretion, to order additional damages considering, among other things, the flagrancy of the infringement. His Honour accepted that an award of additional damages, or exemplary or punitive damages, is in punishment of "conscious wrongdoing in contumelious disregard of another's rights".
His Honour found, in this case, that the evidence did not support an award of additional damages. This was because there was nothing to suggest that the Flatons were aware that they were acting wrongly and taking unfair advantage of the work produced by Look Design. His Honour referred particularly to the Flatons' reliance on Edge's advice about amending the plans by 10 per cent in this regard.
His Honour did, however, consider it appropriate in the circumstance of the case to award Look Design nominal damages of $500.
- Whilst 'shopping around' for a home building contract can save significant amounts of money, designers, architects, builders and potential homeowners should be aware that any plans prepared on the owner's behalf may be subject to copyright or other licensing restrictions. Homeowners should discuss 'ownership' of any such plans up-front to avoid situations where they cannot use those plans, or they infringe copyright when building a home according to those plans.
- As in any litigation, it is important for plaintiffs in copyright actions to properly consider the likelihood that they will be awarded damages if a finding of copyright infringement is made in their favour. The commercial reality facing the plaintiff in this case is that, unless it is successful in obtaining an indemnity costs order (the prospects of which are unknown), it will likely be left out-of-pocket, having expended significant time and money into the proceeding and achieving what can only be described as a pyrrhic victory.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.