The pitfalls of ‘shopping around’ in pursuing the construction of Australia’s Great Dream were highlighted in the recent Queensland District Court ruling Look Design and Development Pty Ltd v Edge Developments Pty Ltd & Flaton  QDC 116.
In this case, a couple looking to build a house (the Apartments) were found guilty of infringing the copyright of house plans prepared by Look Design and Development Pty Ltd (Appearance design) when they licensed another home builder, Edge Developments Pty Ltd (Edge), modify and use these plans. However, only nominal damages were awarded against the Flatons because Look Design failed to demonstrate that it suffered a loss.
Before building their home, the Flatons consulted Look Design, a project home builder, about designing their dream home. Look Design presented the Flatons with their “standard plans”, which they then modified to incorporate the Flatons’ preferences. Look Design then produced a series of plans as directed by the Flatons. Once the Flatons were happy with the plans, Look Design began discussing the price of building the house to those plans.
Around this time, the Flatons approached and hired Edge, another home builder on the project, to build the house. Edge made minor changes to the plans prepared by Look Design and proceeded to build the Flatons’ house.
The legal process
Look Design sued Edge and the Flatons for copyright infringement. Early in the proceedings, Edge settled its case with Look Design with a payment of $30,000, but the case against the Flatons continued.
District Court Judge Long SC found that Look Design had copyright in the plans it produced, even though the plans were adapted from “standard” plans prepared with a computer drawing program and were “rudimentary” in nature (not being fully dimensioned) . His Honor 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 conclusion that the plans were a “work of art” in under the Copyright Act 1968. (Cth) (copyright law).
Given the correlation between Look Design’s plans and the plans used by Edge, Judge Long SC determined that there was a substantial reproduction or copying of Look Design’s plans.
Due to the pre-trial settlement agreement between Look Design and Edge, His Honor was not required to rule on whether Edge infringed Look Design’s copyright in the plans. Instead, His Honor had to consider whether the Flatons had infringed Look Design’s copyright by allowing Edge to reproduce Look Design’s plan in material form, both as the adapted plans and as the house built on it. Flaton land.
Section 36(1A) of the Copyright Act provides that, in determining whether a person has “authorized” the unlawful conduct, the court must consider:
- the extent of the power of the person to prevent the performance of the act of infringement
- the nature of any relationship between the person and the person who committed the act of infringement
- whether the person took reasonable steps to prevent or avoid the act of infringement.
His Honor concluded that it was clear that the Flatons provided the Look Design plans to Edge for the purpose of substantial reproduction, and it did not matter whether or not the Flatons had the power to prevent Edge from substantially reproducing the plans.
The Flatons testified that Edge assured them that they only had to change the plans by 10% to avoid copyright infringement, and that the plans were changed accordingly. His Honor was not persuaded by this evidence and concluded that the Flatons had infringed Look Design’s copyright by allowing substantial reproduction of the plans.
Look Design sought compensation for the loss of opportunity to profit from the construction of the Flaton’s house and additional damages under Section 115(4) of the Copyright Act.
Look Design argued that it would have made a profit of $40,000 had the Flatons chosen to build with them. Agreeing that any compensation it was entitled to for lost opportunity be reduced by the $30,000 paid pretrial by Edge, Look Design sought $10,000 in compensation.
His Honor concluded that Look Design suffered no damage resulting from loss of opportunity. Instead, he argued that it was clear from the evidence that the Flatons were never going to build their home with Look Design, whether or not they infringed Look Design’s copyright, and that the Flatons had never been prevented from looking for another builder to build their house to a similar design.
His Honor also found that Look Designs would not have sold or licensed the plans to another builder and could not be compensated for lost opportunity on this basis.
Section 115(4) of the Copyright Act allows the court, at its discretion, to order additional damages taking into account, inter alia, flagrant infringement. His Honor has acknowledged that an award of additional damages, or exemplary or punitive damages, constitutes punishment for “willful misconduct in disregard of the rights of others”.
His Honor found in this case that the evidence did not support an award of additional damages. Indeed, there was no indication that the Flatons knew they were doing wrong and taking unfair advantage of the work produced by Look Design. His Honor made particular mention of the Flatons’ confidence in Edge’s advice regarding changing plans by 10% in this regard.
His Honor, however, deemed it appropriate, in the circumstances of the case, to award Look Design nominal damages of $500.
Key points to remember
- While “shopping around” for a home building contract can save significant sums, designers, architects, builders and prospective owners should be aware that any plans prepared on behalf of the owner may be subject to duties. copyright or other license restrictions. Homeowners should discuss “ownership” of these plans in advance to avoid situations where they cannot use these plans, or they are infringing copyright when building a home to these plans.
- As in any litigation, it is important that plaintiffs in copyright actions properly assess the likelihood that they will recover damages if a finding of copyright infringement is made in their favor. The commercial reality facing the plaintiff in this case is that unless she succeeds in obtaining an order for costs (the prospects of which are unknown), she will likely be left out, having spent a great deal of time and money to proceed and achieve what can only be described as a Pyrrhic victory.