Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2015] FCAFC 65

In a split decision, the Full Federal Court found that a building developer (Habitare) infringed copyright in building plans created by building designer (Tamawood).

The Facts

Habitare owned and planned to develop two sites of low cost housing in Queensland. Habitare entered into discussions with Tamawood about designing and building the sites. Tamawood prepared two sets of plans for development approval with the Brisbane City Council, known as the “Dunkeld” a single storey duplex and the “Torrington” a two storey duplex. With Tamawood’s agreement, Habitare obtained development approval based on the two sets of plans. A condition of the development approval was that the buildings be constructed “generally in accordance with” the Tamawood plans.

Habitare then decided against using Tamawood to construct the buildings on the two sites and approached Mondo (an Architecture firm - the sixth Respondent) to prepare construction plans. Mondo prepared plans for the two sites for the purpose of obtaining building certificates, which were obtained based on the Mondo plans. Habitare, after its initial builder went into liquidation, engaged the services of Bloomer (a building company – the fifth Respondent) to complete the buildings on the sites.

The Primary Judgment

Tamawood claimed that the Mondo plans infringed copyright in its Dunkeld and Torrington plans. Tamawood brought an action against Habitare and its directors, Mondo and Bloomer for copyright infringement. In a separate action, Mondo sued Habitare and its directors for misleading and deceptive conduct under the then Trade Practices Act 1974.

The primary judge found for Tamawood against Habitare and Mondo but only in respect of the infringement of the Torrington plan, not the Dunkeld plan. In making this decision, the primary judge rejected Habitare’s argument that Tamawood had authorised Habitare under a contractual licence, and Mondo’s consequential argument that Tamawood had authorised Habitare and therefore Mondo’s infringement under a non-contractual licence. The primary judge further rejected Tamawood’s claims against Habitare’s directors and its claim for additional damages. The primary judge found Bloomer to be “innocent infringers” under section 115(3) of the Copyright Act 1968. The primary judge also found in favour of Mondo with respect to its claim against Habitare for misleading and deceptive conduct.

The Full Court had nine issues to determine. The copyright issues centred on infringement of the Dunkeld plan.

The Full Court Decision

Issue 1: The Licence

The issue before the court was the scope and extent of the licence provided by Tamawood to Habitare to use the Dunkeld and Torrington plans.

The primary judge had found that a non-contractual licence allowed Habitare to use the plans for the purpose of obtaining development approval from the Brisbane City Council. However, this licence was extinguished once Habitare resolved not to use Tamawood to construct the buildings and did not extend to Mondo’s use of the plans. The Full Court agreed with the primary judge’s characterisation of the licence. [1] The Full Court found that a bare licence arose by reason of the conduct of the parties and this licence automatically terminated once Habitare decided not to appoint Tamawood as the builder. The Full Court distinguished this set of circumstances from other cases involving implied licences for architectural plans because Habitare had engaged Tamawood to create the plans for building approval with the “common expectation” that Habitare would appoint Tamawood the builder. Once Habitare decided against Tamawood as builder, the licence from Tamawood to Habitare terminated.

Issue 3: Copyright infringement in the Dunkeld plan

The primary judge had found that the Mondo plan “Duplex 1” did not infringe the Dunkeld plan. The primary judge found no objective similarity between the plans and therefore no reproduction, they were “significantly different dwellings”. In the absence of reproduction, the primary judge found no causal connectivity between the plans. This issue split the court.

The majority agreed with Tamawood’s arguments that the primary judge’s consideration of the issues of causal connection were miscarried. The majority summarised the law as it relates to infringement and noted that any discussion of substantial reproduction requires an assessment of the quality of what is taken, rather than the quantity and is a question of fact and degree, and “the finding of causal connection between the copyright work and the alleged infringing work cannot be divorced from the assessment of objective similarity”. [2] The majority referred to another building plans case  Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415 where Lindgren J saw the infringed plan “embedded” in the infringing plan, which had adopted “essential features and substance”. Turning to a comparison between the plans, the majority found the plans disclosed sufficient objective similarity and the Dunkeld plans can be seen “embedded” in the Mondo Duplex 1 plan. As such, Tamawood had made out its claim that Habitare and Mondo had adopted the essential features and substance of the Dunkeld plan. The Respondents had reproduced a substantial part of the Dunkeld plan without the licence of Tamawood and had infringed copyright. [3]

On this issue, the minority disagreed with the majority and found that the primary judge did not fall into error. Comparing the differences between the plans including the dimensions and floor plans, the minority was not satisfied that there was a sufficient degree of objective similarity between the Tamawood and Mondo plans. [4] 

Issue 4 – Mondo as innocent infringer

Mondo submitted that the primary judge had erred in deciding to refuse to consider Mondo’s argument of “innocent infringement” under section 115(3) of the Copyright Act. While this issue for the Full Court was largely procedural, for which it had to consider whether Mondo had actually raised section 115(3), the Full Court found that had the issue been raised by Mondo their arguments were without basis. Mondo, a team of experienced arguments, did not make any reasonable enquiries about the existence of copyright, and did “nothing more than rely on the assurances of Habitare”. [5] Interestingly, this reliance was not enough to protect Mondo from infringing copyright as an “innocent infringer”, but was enough to establish a representation that was misleading and deceptive. 

Issue 5 – Authorisation of Habitare’s infringements

Tamawood submitted that the primary judge had erred in finding that the directors of Habitare (Peter O’Mara and David Johnson) had not authorised Habitare’s infringements. The majority agreed with Tamawood and found the evidence presented a case “overwhelmingly in favour” of the inference that the directors had authorised the infringements. This is because the directors must have known that the Mondo plans needed to be “generally in accordance” with the Tamawood plans to come within the scope of the building approval. The choice for the directors was whether to obtain new building approvals with new plans developed by Mondo, or new plans developed by Mondo within the scope of the Tamawood-approved plans. The directors chose the latter option and “endorsed and ultimately approved” the shortcut approach. [6]

The minority agreed with the majority’s reasoning with respect to the directors’ authorisation of Habitare’s infringement of the Torrington plan, having already found no infringement by Habitare in the Dunkeld plan. [7]

Issue 6 – Additional damages

The primary judge found that Habitare and its directors should not be liable for additional damages because their conduct was not flagrant. The primary judge was not persuaded that there was a calculated disregard of Tamawood’s rights, or any scandalous or deceitful conduct. The Full Court rejected Tamawood’s submissions that the primary judge erred because Tamawood had pleaded its case for additional damages “principally based on the conduct being flagrant”, which the primary judge had found not to be the case. [8]

Issue 7 – Bloomer: innocent infringer?

The primary judge found that as Bloomer had no involvement in the original development approval process involving Tamawood and was unware of the potential infringement claims, Bloomer was afforded the protection of section 115(3). The Full Court agreed with the primary judge and rejected Tamawood’s submisisons. The Full Court found that Bloomer’s conduct was not unreasonable and had no reasonable ground for suspecting any infringement of copyright. [9]

Issues 2, 8 & 9 – non-copyright issues

Issue 2 related to a procedural issue where the court was asked whether Tamawood was precluded from arguing an inference of indirect copying. Issue 8 related to costs awarded to Bloomer by the primary judge. Issue 9 related to an appeal by a director of Habitare against the primary judge’s conclusion that he had engaged in misleading and deceptive conduct. The primary judge had found that in assuring Mondo there was “no problem” with the Tamawood plans, O’Mara had made a representation which was misleading and deceptive within the meaning of section 52 of the Trade Practices Act. The Full Court dismissed Mr O’Mara’s appeal.

Comment

This case is the latest in a long line of cases involving copyright in building plans. It presented three substantive copyright issues: the scope of the licence from Tamawood to Habitare, infringement and the “innocent infringer” defence. The Full Court agreed on all issues save for infringement.

On the scope of the licence, the Full Court approached the construction of the implied licence pragmatically, limiting its scope to what was understood by the parties at the time the plans were created by Tamawood. Once this understanding changed, the implied licence could no longer be implied and was terminated. That the Full Court was asked to imply a licence, in the absence of any express contractual terms, demonstrates a failure on the parties to adequately document their dealings. Asking a court to imply a licence is a costly way to arrange business affairs.

In determining infringement, to put the matter simply, the minority focussed on the differences between the plans, while the majority looked at the quality of what was taken by Mondo.

The case also threw up an intriguing intersection between competition and consumer law and copyright. Interestingly, Mr O’Mara’s representations to Mondo that there was “no problem” with the Tamawood plans were sufficient to establish misleading and deceptive conduct, but insufficient to afford Mondo the “innocent infringer” protection offered by section 115(3) of the Copyright Act.

The case is a cautionary tale for building developers and anyone else who commissions copyright material. After deciding not to engage the services of Tamawood to construct the buildings, Habitare was faced with a choice whether to obtain new plans for a new building approval or obtain new plans within the scope of the existing approval. Habitare chose the latter option. As required by the planning approval to construct buildings “generally in accordance” with the approved plans, Habitare’s decision exposed itself to risk of a claim for copyright infringement by Tamawood. Habitare’s shortcut appears to have cost it dearly, as it is currently in liquidation and one of its directors was declared bankrupt last year.

 

[1] per Jagot & Murphy JJ at 137 and Greenwood J at 93

[2] per Jagot & Murphy JJ at 167

[3] per Jagot & Murphy JJ at 171

[4] per Greenwood J at 89-90

[5] per Jagot & Murphy JJ at 181 and Greenwood J at 95

[6] per Jagot & Murphy JJ at 192-197

[7] per Greenwood J at 96

[8] per Jagot & Murphy JJ at 206 and Greenwood J at 97

[9] per Jagot & Murphy JJ at 213-214 and Greenwood J at 98