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Do you have the right copyright licence for your construction project?

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The Full Court of the Federal Court of Australia (Full Court) recently found in Tamawood Limited v Habitare Developments Pty Ltd (Administrators appointed) (Receivers and Managers Appointed) [2015] FCAFC 65, that a construction company and a firm of architects, had infringed a third party's copyright in construction plans for a housing development.

There were a number of issues considered by the Full Court, but this Insight focuses on the licensing issue.

What architects, developers and builders need to know

Ensure that you have a written copyright licence in place to allow you to use a third party's building plans for construction and not just design and DA approval.

Agree the scope of the services in writing before commencing the relationship, including the scope of the IP provisions, particularly in a design and build scenario.

Obtain an assignment of copyright when using a third party's building plans if possible. Licences, even those presumed to be irrevocable, could ultimately be deemed to be revocable.

Don't take shortcuts regarding possible copyright infringement issues as it could expose you to considerable risks and costs.

Facts of the case

In 2005, Habitare Developments Pty Ltd (Habitare) engaged Tamawood Limited (Tamawood) to produce plans for a low cost housing development in Brisbane for two types of houses, called the 'Dunkeld' and 'Torrington'. They entered into initial discussions about Tamawood also building the houses for two sites. The parties did not enter into a written agreement at any stage.

With Tamawood's agreement, Habitare lodged Tamawood's plans with Brisbane City Council and received approval for the development of each house on the condition that the buildings were to be constructed "generally in accordance with" the approved Tamawood plans.

Ultimately Habitare and Tamawood were unable to come to a commercial agreement regarding construction of the buildings by Tamawood. Habitare then engaged Mondo Architects Pty Ltd (Mondo) to develop construction plans for the sites. These plans were to be generally in accordance with the Tamawood plans, but without infringing Tamawood's copyright. Mondo prepared plans, enabling building certificates to be obtained.

Tamawood brought proceedings against all of the parties for copyright infringement, including the builders.

The primary judge found that Habitare had infringed Tamawood's copyright in the Torrington plan, but not the Dunkeld. Tamawood appealed this decision to the Full Court in respect of the Dunkeld.

Outcome

As the development approval prescribed that the buildings were to be generally in accordance with the DA approved Tamawood plans, Habitare could not have substantially changed them to come within the approval.

However, Habitare could have avoided the infringement and restarted the DA process again, but decided not to do so for commercial reasons.

Despite Mondo making some minor changes to the plans, such as swapping the positions of various rooms, the Full Court found that the evidence supported the inference that the Mondo plans were based on the Tamawood plans. Therefore, the Full Court found that a substantial part of the Dunkeld design had been reproduced in the Mondo plan.

The primary judge described as “relatively casual”, the approach of Habitare and Tamawood to arrangements between them. One of the issues on appeal was whether the Primary Judge had erred in finding that the conduct of Habitare and Mondo was not authorised by licence.

The Full Court held that the argument for the existence of a contractual licence was not persuasive. The evidence did not support any intention that Tamawood and Habitare intended to enter into a legally binding agreement before the terms on which Tamawood would build the houses had been agreed.

The Full Court noted that the case was not analogous to that of an architect who, having been paid to prepare plans for a development application, is taken to have granted a licence for the construction in accordance with those plans.

Jagot and Murphy JJ found that Habitare had a bare licence to use the Tamawood plans. In considering this issue, the Full Court used two approaches:

  1. it was an implied term of the licence that the licence would be terminated if Tamawood was not appointed the builder; and
  2. the scope of the licence was limited in that it only allowed Habitare to use the licence for so long as Tamawood was appointed the builder.

The Full Court also did not accept an argument that Tamawood had to provide a notice of revocation to Habitare to revoke the licence. The common intention had been that Habitare could only use Tamawood's plans in anticipation of Tamawood being appointed builder. Once this anticipation was removed (when Habitare decided to appoint Mondo), Habitare had no licence to do anything with the Tamawood plans.

The Full Court also found that the directors of Habitare had authorised the infringement as they were aware of the risk of infringement, but proceeded with the development nevertheless.

The builder, Bloomer was held to be an innocent infringer.

An employee of Habitare, was also held to be liable for misleading and deceptive conduct.

Author

Donna Short

Partner

61 417 211 808

61 2 9947 6585

donna.short@hdy.com.au

Author

Hazel McDwyer

Special Counsel

61 2 9947 6391

hazel.mcdwyer@hdy.com.au

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