Futuretronics.com.au -v- Graphix: A Lesson In Contracting Reproduction Of Copyright Works

It is wise business practice for a person contracting the creation of copyright works to obtain an assignment of the copyright in those works, or clearly scope the terms of their licensed use of those works. However, what terms will govern the use of those copyright works when you commission a third party to print them?

In the recent Federal Court case of Futuretronics.com.au Pty Ltd –v– the Graphix Labels Pty Ltd & John Atta, the Court adjudicated a dispute between a printer and the copyright owner regarding the printer's later use of the printed copyright works without the owner's express permission, and where no express terms of use had been agreed at the time of engagement of the printer.

Futuretronics is a designer, importer and wholesaler of electronic goods and accessories. Graphix is a printer. Futuretronics approached Graphix and asked Graphix to manufacture some 'skins' – form-fitting vinyl covers for mobile phones, iPods, handheld games and electronic games controllers (like the Microsoft XBOX pictured, right). Mr Atta is an employee of Graphix.

Futuretronics contracted Graphix to make skins bearing artworks provided to it by Futuretronics and then deliver the skins to Futuretronics (who has kindly provided some images of its skins to illustrate this article).

Graphix printed the skins bearing Futuretronics' artworks and delivered them as ordered to Futuretronics. However, it also gave some spare skins bearing the artworks to other potential competitors of Futuretronics as samples, to demonstrate what Graphix could do for those competitors. Graphix also printed up brochures prominently displaying skins with Futuretronics' artworks on them. Graphix handed the brochures to other companies and potential competitors of Futuretronics to market Graphix's skin-printing services.

The artworks provided by Futuretronics were created by an employee of Futuretronics and Futuretronics owned the copyright in the artworks.

The Court found:

• Graphix's printing of the brochures infringed Futuretronics' copyright in the artworks depicted on the skins in the brochures. Further, Mr Atta authorised that infringement.
• the supply by Graphix to its potential customers of samples bearing Futuretronics' artworks did not infringe Futuretronics' copyright.
• it was an implied term of the contract between Graphix and Futuretronics that Graphix would only use Futuretronics' artworks for purposes authorised by Futuretronics, namely, fulfilling orders from Futuretronics for skins. Graphix breached that implied term by supplying sample skins bearing those artworks to potential Graphix customers.

The Court ordered Graphix and Mr Atta to:

• deliver to Futuretronics' solicitors all copies of the brochure and samples of skins bearing Futuretronics' artwork in its possession; and

• provide details of all brochures and skins sent to anyone outside Graphix, including details identifying those to whom the skins or brochures were sent. In December this year the Court will consider submissions from the parties on the amount of damages to be awarded for the infringement, and who should pay legal costs in the case.

What Can We Learn From This?

When dealing with copyright material, parties should agree upon and, preferably, clearly document the terms of its creation, reproduction and permitted use of the copies produced. Specifically, if one party wants to use any of the other party's materials, or works produced using those materials, to advertise its own goods or services, the parties should agree on express licence terms.

This will reduce the risk of one party infringing copyright in the material, or the need for court adjudication of a dispute regarding the scope of permitted use of that material.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.