Venezuela Pty Ltd v Bright - [2017] WADC 79

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: VENEZUELA PTY LTD -v- BRIGHT [2017] WADC 79

CORAM: SWEENEY DCJ

HEARD: 8-11 DECEMBER 2015, 22-23 & 25 FEBRUARY 2016

DELIVERED : 16 JUNE 2017

FILE NO/S: CIV 528 of 2013

BETWEEN: VENEZUELA PTY LTD
Plaintiff
AND
IAN DOUGLAS BRIGHT
Defendant

Catchwords:

Breach of copyright - Copyright infringement - Architectural plans - Copyright Act 1968 - Substantial reproduction - Sufficient objective similarity - Actual copying - Assessment of damages for breach of copyright

Legislation:

Nil

Result:

Plaintiff's claim dismissed

Representation:

Counsel:

Plaintiff: Mr P McGowan
Defendant: Mr R J Price

Solicitors:

Plaintiff: GV Lawyers
Defendant: Tottle Partners

Case(s) referred to in judgment(s):

Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278
Arnstein v Porter (1946) 154 F2d 464
Bailey v Namol Pty Ltd [1994] FCA 1401; (1994) 125 ALR 228
Barrett Property Group v Metricon Homes [2007] FCA 1509 [28]; (2007) 74 IPR 52
Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd [1999] FCA 1371; (1999) 46 IPR 309
Eagle Homes Pty Ltd v Austec Homes Pty Ltd [1999] FCA 138
Fenning Film Services Ltd v Wallsall & District Cinemas Ltd [1914] 3 KB 1171
Henkel Kgaa v Holdfast New Zealand Ltd [2007] 1 NZLR 577; (2007) 70 IPR 624
Henley Arch Pty Ltd v Clarendon Homes (Aust) Pty Ltd (1998) 41 IPR 443
Inform Design & Construction Pty Ltd v Boutique Homes Melbourne Pty Ltd (2008) 77 IPR 523; [2008] FCA 912
Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445
International Writing Institute Inc v Rimila Pty Ltd (1994) 30 IPR 250
Ladbroke (Football) Limited v William Hill (Football) Limited [1964] 1 WLR 273
LED Builders Pty Ltd v Eagle Homes Pty Ltd [1996] FCA 1658; (1996) 35 IPR 215
LED Builders Pty Ltd v Eagle Homes Pty Ltd [1999] FCA 584
Manfal Pty Ltd v Longuet (1986) 8 IPR 410
Microsoft Corporation v Aus China Polaris Pty Ltd (1996) 71 FCR 231
New England Country Homes Pty Ltd v Bradley Moore [1998] FCA 345; (1998) 45 IPR 186
Ownit Homes Pty Ltd v D&F Mancuso Investments Pty Ltd (1988) AIPC 90-488
Pacific Gaming Pty Ltd v Aristocratic Leisure Industries Pty Ltd [2001] FCA 1636; (2001) 116 FCR 448
Raben Footwear Pty Ltd v Polygram Records Inc (1997) FCA 370
Ron Englehart Pty Ltd v Enterprise Constructions (Aust) Pty Ltd [2012] FCAFC
Solar Thompson Engineering Co Ltd v Barton (1977) RPC 537
Spotless Group Ltd v Blanco Catering Pty Ltd [2011] FCA 979; (2011) 93 IPR 235
SW Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466
Tamawood Ltd v Havitare Developments Pty Ltd [2015] FCAFC 65; (2015) 112 IPR 439
Tamawood v Henley Arch [2004] FCAFC 78; (2004) 61 IPR 378
TS & B Retail Systems Pty Ltd v 3 Fold Resources Pty Ltd (No 3) [2007] FCA 151; (2007) 158 FCR 444
University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601
University of New South Wales v Moorhouse (1975) 133 CLR 1; (1975) 6 ALR 193

Table of Contents

Introduction
General legal principles as to breach of copyright in an artistic work
An objective comparison of the plaintiff's plans to the Ross Griffin plans

The similarities between the two designs
The difference between the two designs

The defendant's first dealings with the plaintiff's designer Mr Rule
The defendant visits Mermaid Beach in late January 2009
The development of the plaintiff's design
The defendant meets with Mr Craig Sheiles on 6 August 2009
The defendant signs the Preparation of Plans Agreement on 13 August 2009
Design issues
The defendant decides to part ways with the plaintiff
Mr Rod Druce
The defendant approaches Mr Druce of Ross Griffin – their first meeting
Mr Druce's first sketches and concept drawings
The development of Mr Druce's plans
The defendant gives Mr Druce the plaintiff's working drawings
A preliminary word about the expert evidence
The plaintiff's expert witness Mr Bruce Robinson
The plaintiff's expert witness Mr Martin Dickie
The defendant's expert witness Mr Paul Hofman
Was there actual copying, directly or indirectly?
Does the Ross Griffin design show a sufficient degree of objective similarity to the plaintiff's design to constitute a reproduction of the whole or a substantial part of it?
General legal principles as to damages and notional assessment

Conclusion

SWEENEY DCJ:

Introduction

This is an action for breach of copyright in building plans. The plaintiff company builds high‑end one‑off residences, generally costing between $700K - $2 million, and builds on average 5 – 10 such homes annually. It trades under the name of Craig Sheiles Homes, after its principal Mr Craig Sheiles. It has won a number of industry awards.
The defendant, Mr Bright, is the managing director of a successful pest control company. In 2008 he bought a block of land at 10 Blackwall Reach Parade in Bicton, which is a river block with a fabulous view. He paid $5.2 million for the land and wished to build a beautiful residence for himself and his family. He had some ideas about what he had in mind.
In about December 2008 he visited one of the plaintiff's display homes in Hillarys. 'The Edge' was not a display home that would be built for dozens of customers. It was an advertisement to showcase the level of quality and style that the plaintiff could offer in any house it built, its houses being individually designed for its customers.
The defendant liked the style and finish of the home and approached the plaintiff's sole designer, graduate architect Mr Michael Rule, and the plaintiff's sole salesman, Mr Paul Brown, and had a preliminary discussion. He paid a deposit of $5,000 to get the ball rolling, and Mr Rule began work on developing concept drawings.
Soon after, the defendant travelled to Queensland and, while he was there, he saw a multi-million dollar three-storey house in Mermaid Beach which very much took his fancy. It was a very striking house on the beach, simple and modern in style, and wrapped around a central courtyard containing a swimming pool. The rooms inside the house had an attractive outlook onto the courtyard and pool.
The ground floor at the front consisted of an open plan kitchen/dining/living room spanning the full width of the front of the house. It had a completely flat appearance at the front, with a large wall of glass punctuated only by the odd pillar, giving uninterrupted views of the ocean. The upper floor was also fronted by glass, and flush with the glass wall below it. It also had a simple balcony, also spanning the entire width of the front of the house.
Inspired by this house, the defendant drew Mr Rule's attention to it and pointed out various features that he liked.
Between January and August 2009 Mr Rule worked on developing his design. He made alterations to his design which incorporated certain features from the Mermaid Beach house. Drawings were submitted for local council approval by late May 2009 and, on 13 August 2009, the defendant signed a written Preparation of Plans Agreement by which he agreed to pay $20,000 immediately, and the plaintiff agreed to convert the preliminary plans into the more detailed plans required to build the home. That agreement provided that any such plans would remain the property of the plaintiff and be subject to copyright.
The plaintiff's August 2009 plans and subsequent working drawings are the original plans the subject of this action for breach of copyright. It is accepted that they are original artistic works within the meaning of the Copyright Act 1968 (the Act) and that copyright attaches to them.
The plaintiff subsequently prepared full contract documents for the construction of the house for $1.67 million. Those documents were presented to the defendant on about 17 September 2009.
Not long after that, the plaintiff and the defendant parted ways. There is conflict in the evidence about precisely why that was, but on any version the defendant was unhappy that underfloor heating in the bathroom, shown in the display home, was not included in the specification for his house. He wanted the underfloor heating included in the contract price at no extra cost. He also had a few issues with the design itself. The plaintiff's principal, Mr Sheiles, would not budge on the heating and, on about 24 September 2009, the defendant indicated to the plaintiff that he no longer wished to proceed with the house.
Soon after that, he engaged another builder, Ross Griffin Homes Pty Ltd (Ross Griffin), to design a house for him. Mr Rod Druce, a salesman at Ross Griffin with experience in design, designed the home. Ultimately, Ross Griffin built the defendant's new residence. This was not some cheap version of the plaintiff's design. It cost rather more to build.
The plaintiff's case, in a nutshell, is that the defendant provided Mr Druce with the plaintiff's plans and then Mr Druce used those plans in order to produce the design which Ross Griffin built for the defendant.
It is not in issue that the defendant did indeed provide Mr Druce with the plaintiff's plans. There is certainly an issue over when that occurred.
It is not contended that the defendant had permission or any implied licence to use the plaintiff's plans in the design and construction of his house.
The plaintiff's case is that there is such substantial objective similarity between its plans and the plans of the Ross Griffin house eventually built, and the house itself, that it should be inferred that Mr Druce could not have arrived at those plans through his own independent efforts, and must have used the plaintiff's plans and reproduced a substantial part of those plans. It is alleged that the defendant either directly gave Mr Druce the plaintiff's plans and authorised him to copy them, or steered Mr Druce step‑by‑step, instruction by instruction, to substantially reproduce them.
The plaintiff's action is not against Mr Druce or his then employer, Ross Griffin, which no longer exists, but against the defendant, on the basis that he authorised the infringement of that copyright.
The plaintiff claims general damages pursuant the Act and argues that a sound starting point for assessing those damages is the loss of profit that would have been achieved had the plaintiff built the home. Those expected profits are in the order of $365,000. The plaintiff also claims additional damages pursuant to the Act, on the basis of the alleged flagrancy of the breach.
In order to succeed in such an action, the plaintiff must prove that the infringing design and/or its physical embodiment, the house, reproduced a substantial part of the plaintiff's plans. That involves two elements which must be proved on the balance of probabilities: firstly, a sufficient degree of objective similarity between the two works and, second, some causal connection between the plaintiff's and the defendant's work. If two persons produce substantially similar works through independent effort, there is no reproduction within the meaning of the Act. In other words, the infringing work must not only show sufficient objective similarity, but it must also in fact have been copied, whether consciously or unconsciously, and whether directly or indirectly.
And then the plaintiff must prove that the defendant authorised that reproduction, and that it has suffered damages as a result.
The defendant denies that the Ross Griffin plans and the house that was constructed do bear sufficient objective similarity to the plaintiff's plans as to constitute an infringement of copyright. In any event, he denies any actual copying, and denies that he authorised Mr Druce to reproduce the work in a material form.
Of course, unlike the houses in many of the published cases in this area, these two designs were produced for the same client, to be built on the same block of land, and he had some clear ideas on what he wanted in his house. Those ideas did not change just because he switched building companies.
For the reasons which I have detailed below, I find that the plaintiff has failed to prove that Mr Druce copied, or was steered to copy, the plaintiff's design. I am satisfied that the Ross Griffin home was the product of Mr Druce's own independent effort, and not a copy. I am satisfied that the defendant did not authorise Mr Druce to copy the plaintiff's design, nor cause him to copy it.
Much of this case turns upon issues of credibility and I find both the defendant and Mr Druce to have been both honest and reliable in their recall of the essential facts. That assessment is informed by the objective evidence before the court, particularly Mr Druce's concept drawings and the images of the Mermaid Beach house.
I also consider Mr Rule and Mr Sheiles to have been honest witnesses, although I find that Mr Rule understated the importance of the Mermaid Beach house in this case, but I do not see that as dishonesty so much as a reflection of his genuine perception that it was unimportant and the tendency of the memory to subconsciously re‑write history a little on occasion.
This case did not come down to a contest between the witnesses. The credibility of the defendant and Mr Druce, however, was critical, and carries the day for the defendant. For that reason, the plaintiff's case must fail.
In any event, however, the damages I would have awarded in this case had the plaintiff succeeded would have been nominal.
I will begin by setting out the legal framework that applies to such a case.

General legal principles as to breach of copyright in an artistic work

Section 32(1) of the Act relevantly provides that copyright subsists in an original artistic work that is unpublished, and of which the author was a qualified person at the time when the work was made. A 'qualified person' includes an Australian citizen. Mr Rule was a qualified person.
Section 31(1) of the Act explains the nature of copyright as the exclusive right, in the case of an artistic work, to reproduce the work in a material form, and/or to publish the work, and/or to communicate the work to the public.
Section 35(2) of the Act provides that the author of an artistic work is the owner of any copyright subsisting in the work. Section 35(6) provides, however, that where an artistic work is made by the author in pursuance of the terms of his employment, the employer is the owner of the copyright. It is not in issue in this case that Mr Rule prepared the plaintiff's drawings and plans within the terms of his employment and so the plaintiff is the owner of any copyright subsisting in that work.
For a work to constitute an original work it is not necessary that it be novel or unique. All that must be shown is that the author expended sufficient skill and labour in the creation of the work to sustain a finding of originality.
What will be sufficient in that regard is a question of degree. It must be more than negligible skill and must originate from the author, in the sense that it is the result of a substantial degree of skill, industry or experience. Thus, even if a work is derived from another, there may be separate copyright in each: Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd [1999] FCA 1371; (1999) 46 IPR 309, 312 [10] citing Ladbroke (Football) Limited v William Hill (Football) Limited [1964] 1 WLR 273, 278, 289.
It is well established that architectural plans can attract the protection of copyright as original works. As the court said in Clarendon Homes v Henley Arch:
An architect is not only imitative, but innovative as well. This is true for all sorts of architectural works, from shelters to houses to great public buildings. Accordingly, there is no reason an architect's creative work should not be considered in the same way as great art or high drama: [37]
and earlier in the same passage:
But it must always be borne in mind that a part of the plaintiff's work which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected … It is for this reason that one finds a warning in the cases that it is difficult to establish infringement of copyright in building plans especially plans for project homes where many common features are shared: [37].
A distinction is to be drawn between the ideas that underlie a work and to the expression of those ideas:
Clearly enough, the underlying ideas are not protected by copyright law: they form part of the material available for creative endeavour and are for all to use: Clarendon Homes v Henley Arch at [16].
It is accepted that the plaintiff's August 2009 plans and the subsequent working drawings were original artistic works within the meaning of the Act, and that copyright attached to them. It is not necessary for me to go into detail here as to the evidence concerning how those plans were created, the time the process took, and the care Mr Rule took over them. I am satisfied that the plaintiff's plans and working drawings are original artistic works to which copyright attaches. For reasons which will emerge later, I am also satisfied that the design did in part utilise ideas from the Mermaid Beach house. That does not prevent the plaintiff's design from attracting the protection of copyright.
Section 36 of the Act provides that copyright can be breached:
36Infringement by doing acts comprised in the copyright
(1)Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.
Section 13(1) provides that an act comprised in the copyright in a work means an act that the owner of the copyright has the exclusive right to do, in other words an act of reproducing the work in a material form, publishing the work, or communicating the work to the public. The relevant act in this case is the alleged reproduction of the work in a material form.
In Eagle Homes Pty Ltd v Austec Homes Pty Ltd [1999] FCA 138, Lindgren J explained:
The word 'reproduce' is not defined in the Act. It has its ordinary meaning of 'make a copy, representation, duplicate, or close imitation of' (Macquarie Dictionary) or 'repeat in a more or less exact copy; produce a copy or representation of' (New Shorter Oxford English Dictionary). [70]
It is not necessary that the whole of an artistic work be reproduced to constitute an infringement of the copyright in that work. Section 14(1) of the Act provides that reproduction of an artistic work includes reproduction of a 'substantial part' of the work.
Lindgren J also quoted from Copinger & Skone James On Copyright (13th ed, 1991) at par 8-20 as follows:
It is unusual for an infringement to consist of an exact copy or use of the whole of the plaintiff's work. In some cases, the defendant's work may to a greater or lesser degree resemble the whole of the plaintiff's work, in which case the question is whether the defendant's work is a colourable imitation: (Sillitoe v McGraw-Hill Book Co (UK) Limited [1983] FSR 545). Alternatively, the defendant's work may have been taken from part only of the plaintiff's work. Here, the defendant's work may be an exact reproduction of that part of the plaintiff's work or it may only to a greater or lesser degree resemble that part. In this alternative class of case, the first step is to identify the part of the plaintiff's work which is alleged to have been reproduced and then decide whether it constitutes a substantial part of the plaintiff's work. If it does, but it is not an exact copy of that part, it must then be decided whether it is a reproduction or colourable imitation of that part of the plaintiff's work [Spectravest Inc v Aperknit Ltd [1988] FSR 161].
A colourable imitation is trademark-speak for a trademark that so resembles another as to be likely to deceive, but in this context refers to a reproduction of another's design to which has been introduced contrived differences in an attempt to add plausible individuality.

Relevant to this case, s 21(3) of the Act provides:
21Reproduction and copying of works and other subject‑matter
(3)For the purposes of this Act, an artistic work shall be deemed to have been reproduced:
(a)in the case of a work in a two‑dimensional form—if a version of the work is produced in a three‑dimensional form;
(b)…
and the version of the work so produced shall be deemed to be a reproduction of the work.
As to how the concept of infringing reproduction has been applied by the courts, the principles were neatly summarised in Clarendon Homes v Henley Arch at [18], summarising from, but agreeing with the trial judge:
… (1) the question of reproduction for the purposes of copyright law involves the two elements of resemblance to, and actual use of, the copyright work; (2) there is no reproduction for the purposes of the Copyright Act 1968 (Cth) where two persons produce substantially similar works through independent effort; (3) in determining whether 'a substantial part of the work' has been reproduced, greater weight must be given the quality of what is copied than to its quantity; (4) the degree of protection under copyright law of an architectural plan may be limited by reason of the significant proportion of features which are common to all plans, with the result that the remaining portion of a plan in which copyright will subsist is consequently limited; (5) whether the alleged infringing work is sufficiently similar to the work in which copyright subsists to amount to a reproduction of a substantial part of that work is for the court to determine. The court can be assisted by expert evidence which is of value in exposing the facets of the ultimate question to which the expert opinion evidence is directed.
In SW Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466, 472, Gibbs CJ (Mason & Brennan JJ) stated:
The notion of reproduction, for the purposes of copyright law, involves two elements – resemblance to, and actual use of, the copyright work, or, to adopt the words which appear in the judgment of Willmer LJ in Frances Day & Hunter Ltd v Bron [1963] Ch 587 at 614, 'a sufficient degree of objective similarity between the two works' and 'some causal connection between the plaintiffs' and the defendants' work'.
'Causal connection' and 'objective similarity' – the two elements which must be proved – are not actually expressly referred to in the Act. The Act refers to reproduction of the work and those two elements fall within that concept.
Whether or not there is a substantial reproduction is a question of fact and is a question of degree: Beck v Montana Constructions Pty Ltd [1964–5] NSWR 229; [1963] 5 FLR 298, 300. The question to be asked is whether the defendant's plans and houses, in whole or part, closely resemble a substantial part of the plaintiff's plans: Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278, 289. In Tamawood v Henley Arch [2004] FCAFC 78; (2004) 61 IPR 378 [55] ‑ [56] Wilcox and Lindgren JJ stated:
In our opinion, it must be asked whether the part or parts taken represent a substantial part of the labour, skill and judgment of the author that made the whole work 'original'. Factual questions of degrees of 'significance' or 'importance' of the part to the whole are involved.
In applying the 'substantial part' test in the present case, one must bear in mind that the plan for a project home is partly functional. Placing a kitchen in reasonable proximity to a dining room, and bedrooms in reasonable proximity to each other and to a bathroom, is suggested by broad functional considerations. Those proximities would not be a substantial part of a plan or house regarded as an artistic work. Moreover, they would be ideas. But broad functional requirements can be satisfied in more ways than one. Some features of a project home plan may be dictated by aesthetic and decorative concerns, for example. In these ways, the labour, skill and judgment of the author are called upon. The dividing line between that which is dictated by broad functional requirements and that which is not, is, however, often unclear.
The answer is to be reached by assessing such similarities and dissimilarities as appear to the court between the plans or buildings under consideration: Ancher, Mortlock & Ors v Hooker Homes (286).
Rather than dissecting the plans to determine whether each aspect or feature is distinctive, it is important to consider the work as a whole: Ladbroke (Football) v William Hill (Football) Ltd; Eagle Homes v Austec [75].
The plaintiff's case is that the Ross Griffin design and, by inference, the resulting home, resembles the whole of the plaintiff's work, in that it reproduces 'the layout and traffic flows and the shapes, proportions and interrelationships of the rooms and other spaces – elements which permeate the whole of a project home', as described by Lindgren J in Eagle Homes v Austec. In that case Lindgren J regarded the case as being one of resemblance between the whole of the original plan and the infringing plan, hence obviating the need to decide whether that was a substantial part of the work (albeit deciding that it was). In any event the plaintiff argues that the Ross Griffin plans at least reproduce a substantial part of the plaintiff's plans.
It is permissible and of assistance for the court to have regard to expert opinions, but ultimately these issues are for the court to determine and, in the end, whether the plans reveal 'a sufficient degree of objective similarity' is one of impression: Ancher, Mortlock & Ors v Hooker Homes (286); Barrett Property Group v Metricon Homes [2007] FCA 1509 [28]; (2007) 74 IPR 52.
So the plaintiff must prove sufficient objective similarity between the original work or a substantial part of it and the alleged reproduction, and it must prove copying, directly or indirectly, whether conscious or unconscious: Ron Englehart Pty Ltd v Enterprise Constructions (Aust) Pty Ltd [2012] FCAFC. If there is no copying, there is no breach. If a person independently creates a work that is substantially similar or even identical to another, there is no breach of copyright: Eagle Homes v Austec [86]. The copyright work must be the source from which the infringing work derives: SW Hart v Edwards Hot Water Systems (472).
Differences between two sets of plans may be evidence that tends to prove actual copying, if those differences suggest a contrived attempt to introduce points of difference.
Of course the court must be careful to guard against that circular reasoning which argues that the more the plans differ, the more they are to be regarded as being the same, when real differences support the inference that one is not a reproduction of the other.
It is not necessary that there be a finding that the alleged infringer had in front of him the plaintiff's original plan when he then drew his own plan. Street J said in Ancher, Mortlock & Ors v Hooker Homes (284):
An architect may legitimately inspect an original plan or house and then, having absorbed the architectural concept and appreciated the architectural style represented therein, return to his own drawing board and apply that concept and style to an original plan prepared by him and in due course to a house built to such plan. There is a dividing line separating such a legitimate process from an inspection followed by a later copying of the substantial part of the physical object inspected, even though the copying be from memory; the latter exercise does infringe.
Further, copying need not be done directly or consciously by the designer copying the plan. Instructions given to a designer by a person who has had access to a plaintiff's plan could amount to copying of that original plan. In LED Builders Pty Ltd v Eagle Homes Pty Ltd [1996] FCA 1658; (1996) 35 IPR 215, Davies J found that a Mr Cardile had instructed his designers to alter existing plans of the defendant in such a way as to bring them into line with the plaintiff's plans, and so there was deliberate copying, achieved by the giving of instructions for change rather than by direct tracing of one plan over another, and the defendant was found liable.
A defendant may be held liable even though the designer to whom the instructions are given had no access to the original work and was unaware that he was, in effect, copying the original plan: see Eagle Homes v Austec [55] – [64]; Tamawood v Henley Arch [45]. In Solar Thompson Engineering Co Ltd v Barton (1977) RPC 537, Buckley LJ found (560):
Having regard to the terms of the designer's instructions it seems to me to have been virtually inevitable that he would produce a design having the essential features of his second alternative. It cannot, in my opinion, be regarded as a coincidence that that alternative bears the strong resemblance to the plaintiff's design which it does. It must in my judgment be regarded as a reproduction of the plaintiff's sectional drawing, the instructions given by the defendant to the designer affording a sufficient causal link to eliminate mere coincidence and to give the designer's version the quality of an indirect reproduction of the sectional drawing. So the defendant will not in my judgment escape from the charge of infringement by making use of the independent designer's design.
The plaintiff's case is that Mr Druce reproduced the plaintiff's plans by either direct copying, having been given access to those plans and either directly copied them or, having absorbed them, copied them from memory, or that Mr Druce was given such detailed instructions by the defendant so as to ensure that he substantially reproduced the plaintiff's plans, so that the end result amounted to indirect copying. The plaintiff says that one of those scenarios is the obvious explanation for the objective similarity between the two sets of plans.
The authorities do not dictate a sequence in which the two elements must be considered. In Ownit Homes Pty Ltd v D&F MancusoInvestments Pty Ltd (1988) AIPC 90-488, the appellants complained that the trial judge made no express finding as to whether there was actual copying, having decided that the infringing plan showed no substantial resemblance to the plaintiff's plan. The Federal Court considered there was no obligation on the trial judge, as a matter of law, to make a finding on the issue of copying if there was no substantial resemblance.
It has been pointed out, however, that while the two elements are separate and distinct as a matter of law, there is substantial overlap between the two and that an admission of actual copying, or a finding of actual copying, may well lead to an increased likelihood of an inference of sufficient objective similarity between the plaintiff's plans and the alleged infringing plans: see Tamawood Ltd v Havitare Developments Pty Ltd [2015] FCAFC 65; (2015) 112 IPR 439. In that case, Greenwood J was satisfied that the primary judge fell into error by
almost entirely separately considering first, whether reproduction of the Tamawood plans in suit had been made out (by reason of whether a sufficient degree of objective similarity was evident as between the relevant plans) and then considering as an entirely independent question whether a causal connection had also been made out [43].
Greenwood J offered that:
If there is any sequence as such to the inquiry to be made (recognising, however, that no answer to a particular question in the sequence forecloses asking the other questions as each question overlaps with the other) it is probably this. Logically, the first question (in the absence of an admission) is whether initially there appears to be a sufficient degree of resemblance between Tamawood's plans and those of Mondo. Taking into account the answer to that question, the next question is whether a causal connection has been made out informed by considerations such as Mondo's opportunity to secure access to and use of Tamawood's drawings and apparent similarities (particularly an apparent, high degree of objective similarity in the case of floor plans for low cost project homes) coupled with an assessment of any contended explanation of the similarities by the putative infringer: 'probative similarity'.
The next question, where actual copying is found to have occurred on whatever ground made out, is whether the Mondo plans exhibit a sufficient degree of objective similarity so as to constitute reproduction of the copyright work recognising that a finding of copying can add significance to objective similarity [44].
Where the evidence shows deliberate copying, whether by way of an admission to that effect or an inference drawn to that effect, the courts have shown a willingness to be more readily inclined to find objective similarity. The logic behind this appears to rest on the premise that, if the infringer has been motivated to copy, then what has been copied must need protection. Consequently a finding of copying 'can add significance to objective similarity': Eagle Homes v Austec; see also University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601, 610 for the proposition that what is worth copying is worth protecting.
That approach should be taken cautiously, however:
A defendant is not at liberty to avail himself of the plaintiff's labour for the purpose of producing his own work … In determining whether there has been an infringement it is appropriate to bear in mind the fact, if it be the fact, that the defendant has made unmeritorious use of the plaintiff's work. Then it is easier to find misappropriation
… When copying is deliberate then, so it seems, the court is permitted to show the greater latitude in the plaintiff's favour. We accept this approach should not be taken too far. In a given case there either is or is not sufficient objective similarity to make out infringement. It will only be when the trial judge regards the position as finely balanced that he should err in favour of the plaintiff if the conduct complained of is deliberate: Clarendon Homes v Henley Arch [38] - [39].
The overlap between the two concepts also derives from the logic that, once actual copying has been established, then it can be very superficial to analyse a plan with a view to establishing whether there is sufficient objective similarity by separating out those elements which are common place and unoriginal from those which are original because, to borrow from the logic of the decision in Eagle Homes v Austec [68], where a finding of actual copying had been made against a Mr Panetta:
It strains credulity to say that, although Mr Panetta copied the double garage, planter box, kitchen bench and patio from the 'Kookaburra', all other close similarities between his rough sketch (and thus the 'Paterson') and the 'Kookaburra' are simply coincidental, particularly in light of the fact that he did not claim to have drawn his rough sketch using solely his own imagination.
Consequently, while the two elements are discrete and both must be proved in order to prove an infringement, they overlap, because a high degree of objective similarity between the two works may well more readily enable the court to draw an inference of copying, and evidence of copying may allow the court to more readily reach a finding of objective similarity. The greater the degree of objective similarity, the more readily an inference of copying will be drawn: Inform Design & Construction Pty Ltd v Boutique Homes Melbourne Pty Ltd (2008) 77 IPR 523; [2008] FCA 912 [69]. That is subject, however, to the evaluation of evidence that no copying took place: Henkel Kgaa v Holdfast New Zealand Ltd [2007] 1 NZLR 577; (2007) 70 IPR 624 [43]; Barrett Property Group Pty Ltd v Metricon Homes Pty Ltd [115]. The inference may be displaced by other evidence. It has been said in some of the cases that there is an onus on the alleged infringer to explain the similarities and, in the absence of such explanation, the inference might more readily be drawn: Pacific Gaming Pty Ltd v Aristocratic Leisure Industries Pty Ltd [2001] FCA 1636; (2001) 116 FCR 448. Any such onus can only be an evidentiary onus. It is still for the plaintiff to prove its case.
Where there is no evidence of access to a plaintiff's plan then the plaintiff must show that the similarities between the two 'are so striking as to preclude the possibility of the defendant having arrived at the same result independently': Arnstein v Porter (1946) 154 F2d 464, 468 (2d Cir, 1946) cited in Clarendon Homes v Henley Arch [15].
The plaintiff's case is that both the Ross Griffin design and the house itself constitute a reproduction of its original plans. In assessing the issue of objective similarity, it is appropriate to compare two-dimensional representations to two‑dimensional representations, such that the plaintiff's plans and the Ross Griffin plans should be compared. The plaintiff's plans were never converted into a three-dimensional house and therefore there is no means for this court to compare the plaintiff's house to the Ross Griffin house. There is no suggestion in this case, however, that the Ross Griffin house, as built, was not the embodiment of the Ross Griffin plans and s 21(3) assists the plaintiff in this regard.
It is not sufficient for the plaintiff to prove that Mr Druce of Ross Griffin infringed its copyright by reproducing its plans. The plaintiff's case is not against Ross Griffin, but against the defendant who, it is alleged, authorised any breach of copyright. Pursuant to s 36(1) of the Act:
… the copyright in a artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright.
The plaintiff's case is that the defendant authorised Mr Druce to reproduce the plaintiff's plans. The word 'authorise' should be understood to mean 'sanction, approve, countenance': University of New South Wales v Moorhouse (1975) 133 CLR 1, 12 – 13 and 20 – 21; (1975) 6 ALR 193, 200 – 1 and 207 – 8. It clearly involves a mental element, and cannot be done unwittingly. Gibbs J stated (12 – 13):
The word 'authorise' connotes a mental element and it could not be inferred that a person had, by mere inactivity, authorised something to be done if he neither knew nor had reason to suspect that the act might be done. … It seems to me … that a person who has under his control the means by which an infringement of copyright may be committed – such as a photocopying machine – and who makes it available to other persons, knowing, or having reason to suspect that it is likely to be used for the purpose of committing an infringement, and omitting to take reasonable steps to limit its use to legitimate purposes, would authorise any infringement that resulted from its use.
I accept the plaintiff's submission that the appropriate test for determining whether the defendant authorised the infringement is whether the defendant expressly or impliedly procured or directed the infringing conduct: Microsoft Corporation v Aus China Polaris Pty Ltd (1996) 71 FCR 231, 239 - 246 (Lindgren J), adopted by Merkel J in Henley Arch Pty Ltd v Clarendon Homes (Aust) Pty Ltd (1998) 41 IPR 443.
Section 36(1A) of the Act provides:
(1A)In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:
(a)the extent (if any) of the person's power to prevent the doing of the act concerned;
(b)the nature of any relationship existing between the person and the person who did the act concerned;
(c)whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

Section 36(1A) provides for mandatory considerations to be taken into account, but does not exclude other factors that might be relevant.
In this case the plaintiff submits that, if a finding of sufficient objective similarity is made by comparison between the two sets of plans, then there rests upon the defendant an onus to explain that similarity. The defendant submits that, as he is not the putative copier (the putative copier being Mr Druce), then no onus can sensibly be placed upon him, given that he did not engage in the alleged copying and was not in a position to know the design process undertaken by Mr Druce.
I reject that submission. The plaintiff's case against the defendant rests entirely on establishing that he authorised the copying of the plaintiff's plans. He was the person who was given access to those plans, and then had direct dealings with Mr Druce. Mr Druce was engaged to design his house. He and Mr Druce are the only two people who know what access Mr Druce was given to the plaintiff's plans, and what instructions were given to Mr Druce by the defendant.
In those circumstances, if a finding of sufficient objective similarity is made by comparison between the two sets of plans, I consider that does raise an onus upon the defendant to explain that similarity. A failure to do so will result in the court more readily drawing an inference against the defendant of both actual copying, directly or indirectly, and that he authorised that copying. I accept, however, it is no more than an evidentiary onus. The onus to prove its case rests upon the plaintiff.
Nothing much turns on the legal determination of whether the plaintiff is correct in attributing an evidentiary onus to the defendant, however, because in this case, as will be seen, I am satisfied that the defendant has discharged any evidentiary onus.
I turn now to consider the evidence. I propose to address first the similarities and differences between the two designs to determine whether, prima facie, there is sufficient similarity to merit consideration of whether there has been actual copying and to determine whether an evidentiary onus is cast upon the defendant to explain any similarity. I then intend to address whether, bearing in mind the similarities, a causal connection is proved informed by considerations such as Mr Druce's opportunity to access the plans, and evidence offered by way of explanation of the similarity. Finally, informed by whether actual copying is made out, I will address whether the Ross Griffin plans show a sufficient degree of objective similarity so as to constitute a reproduction of the whole or a substantial part of the plaintiff's plans.
That is nothing more than an attempt to put some sort of structure into place, but bearing in mind that these issues overlap and inform each other.

An objective comparison of the plaintiff's plans to the Ross Griffin plans

The similarities between the two designs

In this case the court was assisted by expert opinion evidence from three experts, Mr Dickie, Mr Robinson and Mr Hofman, all experienced architects, who compared the two sets of plans and reached conclusions as to the likelihood of copying.
I have taken into account those opinions, and will comment on their evidence later, but I accept that it is not simply a question of whether I prefer one expert's opinion over another. The exercise of comparing the plans and reaching a conclusion about whether there is objective similarity is one for the court to undertake. Although the expert evidence has been of assistance, comparison of architectural plans at this level is not an erudite exercise and does not really require expertise.
The description of the two designs throughout this judgment will necessarily be very detailed. I note that in some judgments (dealing with generic display homes) the architectural plans in question have been annexed, which would make life easier, but for the defendant's security I am not prepared to annex the floor plan of his house and, given that the plaintiff complains that its original one-off design has been copied, I am not prepared to annex it either.
In comparing the plans, at this stage I am focusing on the ultimate result of both sets of plans and working drawings. The history of the development of those drawings will be significant, however, in determining the issues of whether there was actual copying and whether the plans developed by Mr Druce do amount to an infringing reproduction. But for now, the focus is on the objective comparison of the plans and working drawings. For ease of reference, where possible I intend to refer to the two sets of plans and working drawings as simply 'both designs'.
Of course both houses were to be constructed on the same block of land in Blackwall Reach Parade, which runs along the river. That block is broadly a long rectangle in shape, much longer than it is wide, with the short boundaries being at the front and back. The block slopes upwards, the high point being at the rear. The front of the property faces north-east and the entire front of the property enjoys a view of the river opposite and in both directions. There are houses to either side of the block, and so there are no views to be had in those directions.
Commencing with the site layout, both designs show the house orientated on the block in pretty much identical fashion. In both designs the house is orientated with the obvious front of the house being parallel to the front boundary, the road and the river, as one would expect it to be on a suburban block, although the entrance in both houses is to the right side of the house, a little back from the front.
From this point on I intend to employ the language of the left side of the block, and the house, and the right side of the block, and the house, meaning the left and right sides as one faces the house from the street, and the front and the rear of the block as one faces the block from the street, rather than exclusively using directions.
In both designs the house is situated to the front of the block and, on the right between the house and the neighbouring property, provision has been made for a future driveway leading to the rear of the block, the rear of the block being left empty to enable potential future subdivision of the block at the rear. The empty land at the rear coupled with its driveway therefore has a battle-axe shape.
In both designs the front of the house has three storeys. An undercroft garage forms the base and is visible from the road. Stacked on top of it is the front half of the main floor. Stacked on top of that is the whole of the upper floor. The main floor is much deeper than the undercroft and upper floor – broadly twice their depth - extending towards the rear of the block. The rear of the house therefore is a single storey. In both designs the level of that main floor is split at the rear, stepping up to follow the rising slope of the land.
In both designs the main floor comprises an open plan kitchen/dining/living area, with the children's bedrooms and bathroom at the rear of the house and a connecting wing consisting of a laundry, staircases and a lift and other rooms. In both designs the upper level includes the master bedroom suite, with walk-in-robe and en suite bathroom, a sitting room and office.
At the front of the house, in both designs, both the main and upper floors have a balcony which spans the entire width of the front of the house and is a simple rectangle, parallel to the street. The fronts of both balconies are flush both with each other and the front wall of the garage, presenting a simple flat front to the street.
Both designs maximise the view from the front rooms and front balconies and interrupt views as little as possible. While the broad orientation of the house and the block allows for passive solar principles, neither design has prioritised passive solar principles in the design of the front of the house, both of which expose the front of the house to the western sun in summer. Priority has clearly been given to the striking feature of one large open plan kitchen/dining/living room enjoying almost uninterrupted views to the river.
The floor space in both designs is similar, although not identical. The total floor area in the plaintiff's design is 856.15 sqm, as opposed to the 877.81 sqm total floor area of the Ross Griffin design. The significance of the broad similarity in size should not be overstated. Both houses are designed for the same block, with the same client in mind, who was not interested in having a large garden. The council requirements for the various setbacks must have been the same and Mr Rule explained that there are also open space calculations which are dictated by council requirements and residential planning code policies. And of course the budget was broadly similar as well.
Turning now to the individual floors in turn, both designs have a very similar undercroft garage. Both have a floor level close to the natural ground level of 4.42 – 4.43 at the front boundary of the site, so that the front of the garage is essentially at ground level. Given its purpose, naturally the garage is essentially all one level. Given the slope of the land, the rear of the garage is below natural ground level.
In both designs entry by cars is gained through garage doors which are fairly central to the front of the garage and the house generally. That necessitates a driveway leading to those doors, which is the short driveway to the house (as opposed to the future driveway on the right side for the land behind). Both designs depict stepped concrete planter boxes at the front of the garage, either side of the garage doors. Both designs provide an arrangement of steps leading down from the planter boxes to the left.
In both designs the garage provides sufficient space to park five cars facing forwards into the garage on a 45‑degree angle, as well as room for a boat. In both designs the garage has a bathroom with a toilet, vanity basin and shower. In both designs access is gained from the garage to the main floor via both stairs and a lift, occupying the right rear corner of the garage, with the stairs in close proximity to the lift.
Moving now to the main floor plan, in both designs this floor houses the kitchen/dining/living room area, the entry to the house, the children's bedrooms and shared bathroom, the laundry and, outside, the alfresco area and space for an outdoor swimming pool. The size of the kitchen/dining/living space is very close in size, but not exact.
In both designs, the front of the house consists of a large rectangular open-plan space comprising the living room on the left, dining area in the middle and the kitchen on the right. The open plan maximises the view onto the corresponding balcony and the river beyond. In both plans there is a very significant expanse of glass made up of stacking glass doors enabling views to the river.
Both designs depict the main floor of the house wrapping around an alfresco/swimming pool area which is not (except perhaps indirectly through glass) visible from the street. Both designs are a sideways U‑shape with the two arms of the U being the front and the back of the house and the base of the U connecting the arms being on the right side of the house, and the space created between the two arms of the U being the alfresco/swimming pool area on the left and centre.
In both designs therefore the alfresco/swimming pool area has privacy from the street because the front, rear and right-hand boundaries of that outdoor area are delineated by the house, and the left-hand boundary of that area is the dividing fence between the house and the neighbours' property on the left. The alfresco/swimming pool area should therefore be able to catch some northern sun.
This feature of the house wrapping around the alfresco/swimming pool area is an obviously attractive feature of both designs. In both designs the living room not only has views out the front to the river, but also looks onto the alfresco/swimming pool area which is directly behind it, and the rear wall of the living room is substantially glass to achieve that view.
In both designs the kitchen in the large open plan space is delineated by a large island bench, perpendicular to the front of the house, with the usual kitchen features of cupboards and cooking equipment on the far right wall of the house as one looks from the street.
Progressing from front to back, behind that open plan area, on the left in both designs is the alfresco/swimming pool area while on the right, in both designs, is the entrance to the house, directly behind the kitchen space. In both designs, one gains access to the entrance from the front of the house via a pedestrian walkway which is split-level (using stairs) following the slope of the block upwards. Neither design utilises the driveway to the right of the house at all, which is reserved for the possible future house at the rear.
In both designs, the entry door opens into an entry area that is reasonably sizeable, the size of a child's bedroom. In both designs that entry area corresponds with the location of the lift on the right, and the stairs coming from the undercroft garage are also in close proximity. From the entry, the large open plan kitchen/dining/living area is to the left of the entry and at the front of the house. To the right of the entry is the connecting wing, leading to the children's bedrooms.
In both designs, the children's bedrooms and shared bathroom occupy the rear of the house. The bathroom is situated in the rear right corner of the house.
In both designs efforts have been made to afford the children's bedroom area some view to the alfresco/swimming pool area. In neither design does the children's bathroom have any view into that area.
In both designs the laundry is in the connecting wing with proximity to a linen cupboard. The laundry is afforded no views of the alfresco area.
Moving to the upper floor, both designs have an office/study, which I will call the office, on the left front of the house, a sitting room in the middle and the master bedroom on the right. In both designs the master bedroom of course has an en suite bathroom and a walk-in robe.
In both designs the lift connecting all three floors is towards the right rear corner of the upper floor, because it is in the right rear corner of the garage two floors below it. The corresponding location on the main floor is near the entry. The staircase is in proximity to the lift.
In both designs, although more noticeably in the plaintiff's design, the upper floor is broadly L-shaped, because it represents half of the sideways U which makes up the shape of the main floor below. The office, sitting room and master bedroom are in a row directly across the front and all have access to the simple rectangular balcony at the front of the house. In both designs, the sitting room has a view down into the alfresco/pool area below.
In both designs the staircase, or its landing, has a view down into the alfresco/swimming pool area below. In both designs, the upper floor sitting room has a window affording a view down to the alfresco/swimming pool area below. The master suite, however, has no view of that area, being on the far right of the house. Its view is of the river at the front of the house.
Finally, I turn to the floor levels in both houses. In both designs, the rear of the main floor is seven stairs higher than the front of the main floor. The plaintiff's design works that split in level by a single flight of seven stairs. The Ross Griffin design works the split by way of two successive flights, one of three stairs and one of four. The end result is the same – seven stairs difference between front and rear. A stair represents two brick courses, a standard measurement.
Leaving aside that similarity, at first blush the floor levels in the two designs, although not too far from each other, show an overall lack of correlation.
In the plaintiff's design, the garage floor level is 4.657 m (the reference to 4.571 appears to be the level of the base of the slab, precisely one brick course), the main floor at the front has a floor level of 7.40 m, the bedroom wing at the rear of the main floor has a floor level of 8.60 m and the upper floor has a floor level of 10.657 m. The plaintiff's side elevation drawing indicates the floor level at 7.40 was chosen to coincide, in effect, with the approximate level halfway through the house with the back of the garage therefore cut in and retained at the back and the sides.
By contrast, in the Ross Griffin design, the garage floor level is 4.40 m, the main floor at the front has a floor level of 7.657 m, the bedroom wing at the rear of the main floor has a floor level of 8.857 m and the upper floor has a floor level of 10.828 m.
It is apparent then that the Ross Griffin design has a lower garage floor level, a higher main floor level at both front and rear and a higher upper floor level, suggesting a general lack of correlation.
On closer analysis, however, there is some correlation in the figures.
The evidence is that 86 mm is the standard measurement of a course of bricks. Two courses of bricks therefore equates to .172m, and three courses to .257m.
The garage floor of the Ross Griffin design is lower than the plaintiff's by precisely three brick courses. The main floor is higher than the plaintiff's floor by precisely three courses, and that correlation is precisely the same at the front of the main floor as it is at the rear of the main floor. And the upper floor level in the Ross Griffin home is higher than the plaintiff's design by, in effect, two brick courses. The difference is but 1 mm.
The fact that different levels within a single design reflect a cohesive pattern which corresponds to standard brick courses is obviously not remarkable. I assume it is positively to be expected, otherwise bricks need to be cut. Mr Rule testified that a designer contemplates the levels and numbers of courses very early on in the design process and said, from a costings point‑of‑view, builders often talk in course heights rather than millimetres or centimetres because they have formulas in costing that work to course levels.
However, the fact that levels within two different designs differ by figures which break down to precise brick courses, is notable. It does not matter whether the floor levels are higher, or lower, or uniformly higher or lower, or higher and lower.

The difference between the two designs

I turn now to the differences between the two designs. Starting with the undercroft garage, while the size is similar, it is not the same.
The Ross Griffin design is almost a square, the only deviation being that the rear wall of the garage, from about the mid-point in the back wall, steps back on the right side to a depth of 1.77m. That additional depth accommodates a bathroom to the right of the mid-point of the back wall. In the absolute rear right corner, on both the rear and right wall, is the staircase leading up to the main floor above. It wraps around the elevator shaft.
By contrast, while the plaintiff's design is similarly stepped back at the rear on the right-hand side (although from a point left of centre) it is stepped back to a much greater depth of 4.105 m and that increased depth accommodates a large storeroom in the rear right corner and most of the staircase, which is a single flight of stairs to the immediate left of both the storeroom and the lift which leads up to the floor above. The staircase is therefore more central and does not take up the right rear corner. And the bathroom is tucked into the front left-hand corner of the garage, nowhere near the lift or stairs at the rear of the garage.
Further, the plaintiff's deeper and wider step-back also accommodates what is plainly a dedicated space for the boat to park, while the Ross Griffin garage does not. That is not to say that the boat does not actually fit in the Ross Griffin design, but it cannot fit as neatly into its own dedicated spot.

The plaintiff relies upon the decision of the Full Court of the Federal Court in Bailey v Namol Pty Ltd [1994] FCA 1401; (1994) 125 ALR 228 in which the court upheld an award of damages to the respondent equating to loss of expected profit on a job manufacturing large bronze window frames for a restoration project, even though no binding contract had been signed for it to manufacture the frames.
The defendant says that Bailey v Namol turns on its own facts, and merely illustrates that damages can be assessed by reference to the loss of profit on a potential contract, so long as this is not purely speculative 'and can be attributed to the infringing conduct of the defendant': Spotless Group v Blanco Catering [131].
Bailey v Namol is entirely distinguishable on its facts. In that case, the respondent had tendered for and begun work on designing the window frames, and had been sent a contract for that work to be signed. The appellant, who was a director of the respondent acting in acute conflict of interest, formed another company to act in competition to it and tout for the job, which it succeeded in getting on the strength of the respondent's designs for the window frames. The contract was not signed on behalf of the respondent company because its own director subverted that process.
In those circumstances, the appellant having deliberately frustrated the business opportunity which was certainly going the respondent's way in order to divert it to his own new company, the court was prepared to compensate that loss of opportunity and upheld the original award of damages based on loss of expected profits.
That is very far from this case. There was an obvious causal link between the infringement of copyright and the loss. I accept that the case lays down no general principal that assists the plaintiff in this case, given the findings of facts I have made about the defendant announcing that he would not be building with the plaintiff.
The defendant points out that decisions both before and after Bailey v Namol recognise that an assessment of damages on the basis of lost profit is not an appropriate measure of damages where the breach of copyright does not cause the loss of the project to the copyright owner, such as where the infringer would not have transacted with the copyright owner anyway: Manfal Pty Ltd v Longuet (1986) 8 IPR 410, 422; New England Country Homes Pty Ltd v Bradley Moore [1998] FCA 345; (1998) 45 IPR 186, 192. That is consistent with the general principles of causation. The defendant argues that the plaintiff did not suffer any loss of profits in this case because the evidence establishes that the defendant would not in any event have transacted with the plaintiff. I accept that submission.
Had I found for the plaintiff in this case, I would not have awarded damages based on, or guided by, the loss of the profit that would have been generated had the plaintiff constructed the house. For reasons that I have earlier detailed, I am satisfied that, by reason of the plaintiff's failure to include the underfloor heating in the starting specification, and the subsequent refusal to include it, overlaying a degree of dissatisfaction and pressure that the defendant already felt and certain issues he had with the plaintiff's design, the defendant was not going to build with the plaintiff in any event.
Had the defendant walked away from this project entirely and not built a house at all, the plaintiff would still have lost the anticipated profit on this job, but would have had no recourse against him.
Had he built a house which was wildly different to the plaintiff's design, such that it had no realistic prospects against him, the plaintiff would still have lost the anticipated profit on this job.
Even had I found that the plaintiff authorised Mr Druce to infringe the plaintiff's copyright, it was not that infringement which caused the loss of the profit. It was the fact that the plaintiff lost the defendant as a client.
There is no evidentiary basis for concluding that the defendant parted ways with the plaintiff in order to infringe its copyright. This is not a case of a client shopping for a cheaper builder. The house he built was in the end more expensive than the design he walked away from and by the time he approached Mr Druce his relationship with the plaintiff was at an end. There is no causal link between the plaintiff's loss of profit and any infringement, had I found an infringement.
Even if I had been persuaded to award damages informed by a loss of profit, I am not persuaded that the plaintiff was not able to carry out other projects during the notional timeframe for building the defendant's home, although no doubt there was some lag time. I accept that his company is always taking on work to generate income over the following years, and that considerable effort might be put in which is not immediately rewarded until the project is really underway. But there was no compelling evidence of the plaintiff's overall financial position taking a hit following the loss of the defendant's project.
I certainly accepted Mr Sheiles' denial that he had decided it was more profitable to decline the defendant's request for underfloor heating, and let him go as a customer because there was so much other good work that he could make a profit on, but it does not follow that there was no other work which presented itself within a reasonable time which might not otherwise have been accommodated, hence reducing any loss of profit.
The building contract allowed a period of 350 working days, or 70 weeks for construction. When it was suggested to Mr Sheiles in cross‑examination that during that 70 weeks, freed up from building the defendant's home, the plaintiff company would have been taking on work it could not otherwise have undertaken, his answer was entirely unresponsive.
Mr Sheiles also claimed that, during the nearly 10‑month period that Mr Rule was designing the defendant's house, he was 'removed from the ability to work for other people'. I assume what he means by that, however, is that any time devoted on the defendant's project was time unable to be spent elsewhere. Given that the company built on average between 5 – 10 houses per year, and that Mr Rule was its only designer, it cannot really be the case that Mr Rule devoted 10 months exclusively to this project.
Moving on to the licence fee method of assessing damages, the plaintiff would not have licensed its plans to Ross Griffin. It was not in the business of licensing its plans to other builders. No evidence has been put before the court to provide any basis for assessing damages according to the licence fee method. My only sense of what such a licence would be worth is gleaned from the cases in this area. For example, in LED Builders Pty Ltd v Eagle Homes Pty Ltd [1999] FCA 584, the evidence was that a reasonable licence fee according to the project home industry was 2% of total construction cost. In this case that would result in a figure of $33,460, nothing like the sum the plaintiff has claimed. The plaintiff does not claim damages on this basis, although it generally claims damages at large.
Where the plaintiff has no previous practice of licensing the copyright material and is unable to prove any specific loss of commercial opportunity, damages at large may still be awarded: Spotless Group v Blanco [133]. In such a case the court will award what it thinks is right, as if it were a jury, even if loss cannot be precisely calculated and some amount of speculation is involved. But that involves proving some loss.
Even if the plaintiff cannot establish that it has suffered any damage as a result of the infringement of its copyright, it is entitled to nominal damages to vindicate the invasion of its proprietary rights: Spotless Group v Blanco [133]. The defendant submits that plaintiff could only be entitled to nominal damages in this case.
I see no evidence of damage suffered as a result of the alleged infringement, even had it been made out. Any financial disappointment from the work performed by the plaintiff all coming to naught, was because the plaintiff lost the client. Whether that was reasonable or not, about which perceptions obviously differ, matters not.
There is another factor to consider here as well. The project home cases generally concern competitors being able to market designs to the project home building public, such that the one infringing design might be built again and again and even, as was the case in LED Builders v Eagle Homes, be a more commercially successful plan than the infringed design. The infringement occurs with no fee being paid to the original designer.
By contrast, the defendant paid the plaintiff $25,000 to produce the design. On parting ways with the plaintiff, the defendant forfeited his money. I accept that the $25,000 does not neatly equate to Mr Rule's time spent to that point. These deposits are worked out on a percentage basis, not an hourly rate. But still, $25,000 is a decent sum to pay when nothing was built. So the defendant gave valuable compensation for Mr Rule's skill and effort.
Had I found for the plaintiff, I would have awarded nominal damages to vindicate the invasion of its proprietary rights only, in the sum of $1,000 damages.
In addition to general damages, the plaintiff seeks additional damages pursuant to s 115(4) on the basis of 'the flagrancy of the infringement':
(4)Where, in an action under this section:
(a)an infringement of copyright is established; and
(b)the court is satisfied that it is proper to do so, having regard to:
(i)the flagrancy of the infringement; and
(ia)the need to deter similar infringements of copyright; and
(ib)the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright; and
(ii)whether the infringement involved the conversion of a work or other subject matter from hardcopy or analog form into a digital or other electronic machine readable form; and
(iii)any benefit shown to have accrued to the defendant by reason of the infringement; and
(iv)all other relevant matters;
the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.
Although s 115(4) implies that the court ought to have regard to each factor enumerated under s 115(4)(b), discussions at the outset of the trial resulted in the plaintiff being content and giving an assurance that it would rely only upon its pleading of flagrancy and no other basis. Nevertheless, I shall broadly consider those factors.
As to additional damages, 'flagrancy' connotes conduct which could properly be described as 'glaring, notorious, scandalous' or 'blatant': Raben Footwear Pty Ltd v Polygram Records Inc (1997) FCA 370. The presence of mere 'deliberate' conduct does not of itself justify an award of additional damages: International Writing Institute Inc v Rimila Pty Ltd (1994) 30 IPR 250, 255. Additional damages should only be awarded if the infringer's conduct deserves punishment, or if there is a need for deterrence; they are appropriate if the infringer's conduct was vindictive, reprehensible or malicious: TS & B Retail Systems v 3 Fold (No 3) [211].
Had I found that the defendant did authorise Mr Druce to infringe the plaintiff's copyright, I would not have been prepared to award additional damages. While I am satisfied that any such actions would have been deliberate, they would have been in the context of a person wanting to build a beautiful home for himself and his family, and wanting the best design he could achieve. The defendant made no financial profit in any alleged infringement of copyright. What motivated him could only have been a desire to have the house he wanted. There was no profit to be made, and indeed he built a more expensive house.
The line between underlying design concepts and functional considerations, and original design which is protected by copyright, is not always obvious, and the defendant was in the position that he wanted certain features in his house, and he still wanted them even though he was no longer willing to deal with the plaintiff.
It is a harsh position if, having travelled partly along a path with one designer, the client is then banned from building a house that he loves, just because his first designer employed certain ideas already. Had I found that the defendant did authorise Mr Druce to copy the plaintiff's design, I would not have regarded that conduct as 'glaring, notorious, scandalous' or 'blatant', or even calculated to disregard the plaintiff's rights, as opposed to deliberate. Nor would I consider this to be a case where the court should award additional damages to mark its disapproval, by contrast, for example, to a case where the infringement was done for commercial gain against a competitor. There is no message to be sent to the industry here, and the defendant's conduct after the alleged breach was simply to build his home. There is no further gain he could have made.
It follows that, had the plaintiff succeeded, I would only have awarded the total sum of $1,000 damages already mentioned.

Conclusion

The plaintiff's claim is dismissed.