Thinking of copying a builder’s plans? Think again!

The design arm of a building company is an important part of its operations. Architectural plans create unique styles which add value to a builder’s business and reputation and should be protected, particularly in a competitive environment.

A recent decision on copyright infringement raises important points for builders – the need to have systems in place to protect designs from potential copyright infringement and the need for caution when builders are privy to another’s designs.

Copyright law in Australia

The creation of a ‘work’ will result in its automatic protection as intellectual property under the Copyright Act 1968. The protection applies to relevant material once certain criteria are satisfied. Accordingly, the owner of copyright material need not register or pay for protection. The copyright simply subsists in a piece of work.

The subject of copyright material comprises ‘artistic works’. Plans and designs created within a building enterprise are clearly recognised in this definition.

The owner of copyright material has the exclusive right to reproduce it in material form, publish the work and communicate it to the public. Infringement occurs if a person does anything that constitutes the exercising of these rights or authorises another person to do so, without permission of the owner of the copyright.

Case study

The Federal Court decision in the case of Henley Arch Pty Ltd v Lucky Homes Pty Ltd (13 October 2016) concerns a blatant disregard for the copyright inherent in design plans and shows the Court’s willingness to order compensation for loss suffered due to copyright infringement and serves as a warning for builders to be cautious when working with plans provided directly by the client.

The Mistrys were potential customers of Henley Arch, a project home builder. They engaged Henley Arch to quote for the design and construction of their home. Negotiations took place and Henley Arch provided a quotation for construction of a home in its ‘Amalfi’ series. Initially, the Mistrys sought inclusion of the ‘Avenue’ series façade but later abandoned this, opting for the less-expensive ‘Eclipse’ series facade.

Ultimately, the Mistrys did not proceed with Henley Arch.

Despite having signed an acknowledgement regarding the confidentiality and exclusivity of the documents provided by Henley Arch, they took the plans (which contained the original creator’s copyright title block) to Lucky Homes. After Lucky Homes made some minor amendments to the plans, the parties negotiated a package for Lucky Homes to build the home … which included the Henley Arch ‘Avenue’ series façade!

Henley Arch commenced proceedings against both Lucky Homes and the Mistrys, for copyright infringement. In its judgment, the Court considered that the ‘substance and essential features of the Amalfi Avenue floorplan’ had been duplicated by Lucky Homes and incorporated into the plans used by Lucky Homes to construct the home. The Court also found that the Mistrys had, by their conduct, authorised use and duplication of the Henley Arch plans.

Lucky Homes was ordered to pay compensation of $34,400. The Court ordered a further payment by Lucky Homes and Mr Mistrys of $25,500 and $10,000 respectively, for exemplary damages on account of the ‘flagrancy’ of the infringement. This ‘flagrancy’, the Court considered, was ‘demonstrated by deliberate and calculated acts of infringement’ which was evident by the facts – taking the plans to Lucky Homes, replacing the original title block with alternate design credentials and constructing a home that was almost identical to the work created in the original plans.

What constitutes infringement?

Infringement may be direct or indirect. In the building industry, most copyright cases will involve direct infringement. This means a person, not being the owner of a work nor licensed to reproduce it, either engages in a breach of copyright or authorises that breach. Knowledge of having engaged in copyright activity is irrelevant in establishing the offence – the mere conduct alone will suffice.

There needs to be:

(a)     a link between the work and the reproduction;

(b)    an objective similarity between the original and the copy; and

(c)    the reproduction must be in material form.

The objective similarity need not relate to an entire work provided a ‘substantial part’ of it is reproduced. Importantly, a substantial part of the work is often based on the quality rather than the quantity of what has been copied. Whilst a Court will look at the overall similarities between two sets of plans, the reproduction of unique or important design aspects will be influential in determining whether the work has been infringed. The reproduction of a distinct feature, having a visual aspect … such as the ‘Avenue’ series façade … will be highly relevant.

The individuality of the infringed work is also significant as is an awareness by the infringing party of the commercial viability of a particular aspect of the design.

Remedies

The Court may order an injunction to prevent use of the plans. It may also award monetary damages for loss suffered … including an account of profits and order the infringing party to pay legal costs.

Exemplary damages (additional damages awarded as a deterrent and to punish) may be ordered for the flagrant and deliberate misuse of plans, as in Henley Arch v Lucky Homes.

Conclusion

Copyright law has developed over the years to include an expanding category of works and in an effort to address the ease with which technology can reproduce, transform and disseminate material. This is particularly relevant in the building and construction industry, where a range of design software is available to reproduce, manipulate and re-configure plans.

Despite these advances, the objectives of copyright law remains to ensure the creators of copyright work receive recognition and reward for their efforts and to prevent others from infringing and benefiting from that work.

Builders risk liability for infringement when requested to work with Owners who bring their own architectural designs for a proposed project. Builders should use extreme caution to determine where the plans have come from and whether their use is authorised.

An Owner may be misinformed or unaware of their potential liability and in this regard, the Owner’s ‘word’ may need further investigation.

Builders should also ensure that they have systems in place to protect their own intellectual property and that potential clients acknowledge in writing the confidentiality and exclusivity of plans provided.