Coles v Dormer (No 2) [2016] QSC 28 (2016) 330 ALR 151; [2017] 1 Qd R 63

SUPREME COURT OF QUEENSLAND CITATION: Coles v Dormer & Ors (No 2) [2016] QSC 28 PARTIES: STEPHEN VINCENT COLES (Plaintiff) v JAMES DORMER (First Defendant) and MICHAEL CLARK (Second Defendant) and JOHN ARTHUR BREDEN and EDITH MARY KATHRYN BREDEN (Third Defendants) FILE NO/S: SC 177 of 2014 DIVISION: Trial PROCEEDING: Claim ORIGINATING COURT: Supreme Court at Cairns DELIVERED ON: 26 February 2016 DELIVERED AT: Cairns HEARING DATE: 13 November 2015 JUDGE: Henry J ORDERS: 1. The defendants pay the plaintiff damages in the amount of $70,000. 2. I will hear the parties as to costs. CATCHWORDS: INTELLECTUAL PROPERTY - COPYRIGHT - REMEDIES FOR INFRINGEMENT - DAMAGES - GENERALLY - ADDITIONAL DAMAGES - where the defendants had constructed a house substantially replicating the house of the plaintiff who had been assigned the copyright of the house plans - where the defendant complied with remedial orders to remove publicly visible external indicia of replication of the plaintiff’s house - where the infringement was flagrant and involved a reckless indifference to the rights conferred by copyright law - assessment of damages - whether compensatory damages for infringement of copyright is to be paid for the plaintiff’s loss suffered - whether additional damages in accordance with s 115(4) of the Copyright Act 1968 (Cth) should be applied -- 1 of 7 -- 2 Copyright Act 1968 (Cth), s 115(2), s 115(4) Bailey v Namol Pty Ltd (1994) 125 ALR 228, cited Coles v Dormer & Ors [2015] QSC 224, cited Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445, cited Prior v Lansdowne Press Pty Ltd (1975) 12 ALR 685, cited COUNSEL: C Ryall for the Plaintiff Dr M Jonsson for the First, Second and Third Defendants SOLICITORS: Robert P Palethorpe for the Plaintiff Williams Graham Carman for the First, Second and Third Defendants Introduction [1] I gave judgment for the plaintiff in this matter, finding the defendants had infringed the plaintiff’s copyright in house plans (“the Skyring house plans”).1 The first and second defendants had constructed a house for the third defendant, substantially replicating the nearby house of the plaintiff, using plans that were a reproduction of a substantial part of the Skyring house plans. In giving judgment I granted an injunction requiring the removal of the most publicly visible external indicia of replication. I postponed determination of the balance of relief to allow time for those remedial works to occur. [2] The remedial works have now been completed. The parties have been heard further and it is now necessary to determine the balance of relief to be ordered. Compensatory and additional damages are available [3] Section 115(2) of the Copyright Act 1968 (Cth) provides: “Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.” (emphasis added) [4] As between damages or an account of profits the plaintiff has elected to seek damages. [5] Further to the damages which may be awarded pursuant to s 115(2), “additional damages” may be awarded pursuant to s 115(4). [6] Given the availability of damages in s 115(2) as an alternative to an account of profits and given the availability of additional damages through s 115(4), it is apparent the reference to damages in s 115(2) is to compensatory damages. [7] Such compensatory and additional damages as should be awarded here cannot be precisely calculated. Moreover any damages ordered pursuant to s 115 will reflect an overall assessment of the appropriate damages - compensatory and additional - for 1 Coles v Dormer & Ors [2015] QSC 224. -- 2 of 7 -- 3 the infringement. Nonetheless, in the interests of transparency of reasoning in this admittedly imprecise exercise, it is desirable to articulate separate consideration of the assessment of compensatory damages pursuant to s 115(2) and of additional damages pursuant to s 115(4). Compensatory damages [8] The purpose of compensatory damages for infringement of copyright is to compensate the plaintiff for the plaintiff’s loss suffered as a result of the defendants’ infringement of copyright.2 There is no exclusive means of measuring that loss.3 The appropriate measure or measures will vary depending upon the circumstances of the case. [9] For example, in some cases the measure of damages might properly be the often cited formulation of Lord Wright MR in Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd, namely “the depreciation caused by the infringement to the value of the copyright as a chose in action”.4 Such a measure is self-evidently appropriate where plaintiffs intend to profit from the commercial use of their work in the market place and seek to protect its value to them for that purpose. However, it is inappropriate where the value of the copyright to the plaintiff has nothing to do with preserving its potential value for use in the market place and, to the contrary, lies in the value of its non-use. [10] Here, in an approach with echoes of Lord Wright’s focus on the copyright’s commercial worth, the defendants argued the measure of damages ought lie in the copyright’s value to the original copyright owner, Mr Skyring or his company. That, it was submitted, might be achieved by assessing a fair remuneration for a notional bargain struck between hypothetically willing parties in the shoes of the original copyright owner and the infringing user. To that end it was submitted it would be appropriate to award damages somewhere between the original fee charged to create the plans, a total of $16,2365 and the fee of $110 for the assignment. Such an approach is premised on the value of the copyright to its assignor, not to its assignee, the plaintiff Mr Coles. It was not the assignor but Mr Coles who at the relevant time held copyright. It is not the assignor but Mr Coles who is the relevant injured party. It is Mr Coles’ loss as a result of the infringement that falls to be compensated. The notional loss to the assignor is not an apt measure of Mr Coles’ damages here because the value to Mr Coles of what he sought to protect by paying for the assignment of the copyright was different than the monetary value it held from the perspective of Mr Skyring or his company. [11] The mischief Mr Coles here sought to prevent by acquiring the assignment of the plans to his house was the apparently intended use of the plans by the defendants to build a copy of his house nearby. His concern lay in preserving the uniqueness of his home - the very feature that had motivated his acquisition of it in the first place - and thus in preserving his pride and pleasure in owning it and in preserving its value. The loss to the plaintiff in consequence of the infringement was therefore his loss of enjoyment of a locally unique residence and a potential loss of that residence’s value. 2 Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445, 446. 3 Ibid 446-7; Bailey v Namol Pty Ltd (1994) 125 ALR 228, 237. 4 [1936] 1 Ch 323, 336. 5 Ex 1 Vol 2 docs 36 & 39. -- 3 of 7 -- 4 [12] Preservation of the plaintiff’s pride and pleasure in owning a unique property and preservation of its value derived predominantly from preserving the uniqueness of its publicly visible exterior appearance. The fact the inside of the third defendant’s home and part of its non-publicly visible exterior still substantially replicates the plaintiff’s - a direct causal result of the infringement - is a fact so unlikely to be widely known in the house sales market as to have no material bearing on market value. I infer the plaintiff’s knowledge of the fact of continuing substantial internal replication and non-publicly visible external replication will to an extent still detract from his enjoyment of his home’s uniqueness. However that extent is very slight, particularly in comparison to the significant loss of enjoyment that I accept did flow from the substantial publicly visible external replication that flowed from the infringement. [13] While the plaintiff deserves to be compensated for that significant loss of enjoyment, the defendants’ compliance with remedial orders made by me have the consequence it is a loss which only endured for less than two years. I note for completeness that there is no evidence of any loss materialising from the potential for loss in property value during that period, save arguably for concern about that potential, which I would in any event regard as part of the plaintiff’s loss of enjoyment. [14] The plaintiff’s counsel argued in effect that the remaining publicly visible general similarity in proportion and style of the two properties would by implication perpetuate some ongoing loss of enjoyment and potentially some loss of property value. I reject that argument. There is no evidence before me that could allow the drawing of any such inference as to future loss of property value. Further, the inference of future loss of enjoyment by reason of a publicly visible similarity in proportion and style also lacks evidentiary foundation. It was the visible external replication that was the plaintiff’s main concern. Further it ought be borne in mind this is a copyright case, not a patent case. Mr Coles’ acquisition of copyright could not have protected him from a house of merely similar external proportion and style to his being built nearby. [15] The carrying out of the remedial works cost $43,750. It was a very significant step in minimising the plaintiff’s loss caused by the infringement. It remains to compensate the plaintiff for his temporary past loss of enjoyment of his locally unique residence prior to the remedial works and such slight loss of future enjoyment as will flow from his knowledge of the internal and non-publicly visible external replication of his residence. Assessed today, an overall award of $10,000 would adequately compensate that loss. Additional damages [16] Section 115(4) provides for additional damages: “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; (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 -- 4 of 7 -- 5 (ii) whether the infringement involved the conversion of a work or other subject matter from hard copy or analogue 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.” [17] The considerations listed in s 115(4)(b) of apparent relevance here are emphasised in the above extract of s 115(4)(b). [18] The defendants here submitted there was no justification for any allowance under s 115(4). They submitted the infringement involved no flagrancy, bad faith or calculated disregard of the plaintiff’s rights as assignee of the Skyring house plans. Rather the defendants characterised their infringement as deriving from their mistaken understanding the original owner of Mr Coles’ house, Mr Spicer, had legitimate title to the relevant copyright. [19] The argument for such a sympathetic view of the defendants’ conduct relied in part upon Mr Clark’s evidence that the first and second defendants approached the Spicers and confirmed the Spicers had no objections to them building a house largely replicating their design.6 This, it was submitted, suggests the defendants were acting in good faith or, as it was put when the evidence was led, attempting to legitimise what was done.7 However, they exhibited no commitment to legitimacy or good faith at all after Mr Coles informed the defendants he had acquired copyright and sought to negotiate sensibly with them.8 Despite having been told by the owner of the very house they sought to replicate that he held copyright in the Skyring house plans and did not want his house replicated, the defendants ignored him, pressed on using plans plagiarised from the Skring house plans and built a virtual replica anyway. [20] The defendants’ argument also relied upon the proposition that it would not have been obvious to the defendants that Mr Skyring or his company “held sole ownership of the relevant right”9 because that assessment involved a question of fact and degree about which reasonable minds might differ. That reasoning appears to be founded upon an unpersuasive construct about the lack of originality of Mr Skyring’s work, advanced in submissions at trial,10 rather than evidence of a belief held by the defendants. Given the obvious visual differences between the Skring house plans and the plans described in my judgment as the Spicer rough ideas email, I do not accept the defendants could have believed with any genuine confidence that it was permissible to create and use plans copied from the Skyring house plans. [21] Those visual differences, coupled with the defendants’ knowledge of what Mr Coles told the first and second defendant, had to have indicated to the defendants that Mr 6 T2-11 L30. 7 T2-10 L43. 8 While Mr Coles did not communicate directly with all three defendants I refer to them collectively herein because I found in my reasons for judgment at [69] that all three defendants had knowledge of the relevant information and were in collective agreement about pressing on regardless. 9 Defendants’ Submissions as to Damages [18]. 10 Coles v Dormer & Ors [2015] QSC 224 [32]. -- 5 of 7 -- 6 Coles had at least a credible claim to ownership of copyright which they would infringe by proceeding as they did. To now imply the ensuing infringement was mild because the defendants did not know with the certainty of a legal judgment that Mr Coles was in the right is to ignore their knowledge of the apparent credibility of Mr Coles’ position. The infringement was not a mere product of mistake or carelessness.11 [22] The defendants’ conduct when presented with Mr Coles’ concerns and apparently credible representations that he held copyright in the Skyring house plans was to deliberately press on and use plans substantially copied from the Skyring house plans to build a house effectively replicating Mr Coles’ house. They took a calculated commercial risk in the pursuit of their own benefits in disregard of Mr Coles’ rights. They persisted in their denial of Mr Coles’ rights even after the filing of this claim, indeed even after the agreement of experts that substantial copying of the Skyring house plans had occurred, forcing the plaintiff to endure the stress of enforcing his rights through to finality in contested litigation. [23] Reference to the above mentioned features in the context of the considerations in s 115(4)(b) exposes a number of overlapping relevant considerations. The above mentioned features of the infringement involve flagrancy in that the infringement was committed in flagrant disregard of Mr Coles’ apparently credible assertion of copyright. In that sense the defendants disregard of Mr Coles’ rights in committing the infringing behaviour is a relevant consideration under s 115(4)(b)(i), “the flagrancy of the infringement”. Even if I am wrong about that, it is such an obviously relevant consideration that regard would otherwise be had to it pursuant to s 115(4)(b)(iv), “all other relevant matters”. It is relevant pursuant to s 115(4)(b)(ib) that after the filing of this claim the defendants forced the plaintiff to endure the stress of enforcing his rights through to finality in contested litigation. Further, if conduct after being informed of an alleged infringement is relevant pursuant to s 115(4)(b)(ib) then by analogy the persistence in planned conduct here, after credible early warning that the planned conduct will be an infringement, is also a relevant matter pursuant to s 115(4)(b)(iv). Finally, infringements of this kind involve such reckless indifference to the rights conferred by copyright law that they need to be deterred, a matter to which regard may be had pursuant to s 115(4)(b)(ia). [24] I am satisfied having regard to the above mentioned features that it is proper to award additional damages and to do so in an amount carrying appropriate punitive and deterrent sting. [25] In quantifying those damages I do not overlook the burden of the remedial works performed by the defendants. While the performance of those works substantially reduced the potential compensatory damages, the fact they had to be carried out would also have some deterrent effect. I temper my approach accordingly. That said, the performance of the remedial works is not sufficient deterrence alone and does not mitigate the significance of the other features here relevant to an award of additional damages. [26] An award of $60,000 additional damages is appropriate. 11 Cf Prior v Lansdowne Press Pty Ltd (1975) 12 ALR 685, 690. -- 6 of 7 -- 7 Conclusion [27] The defendants have conducted a joint defence. They have not submitted or advanced evidence to suggest such damages as I do assess ought be other than a single amount for which they are jointly and severally liable. [28] Having regard to the above conclusions as to the appropriate award of compensatory and additional damages I assess damages in the amount of $70,000. [29] It remains to hear the parties as to costs. Orders [30] My orders are: 1. The defendants pay the plaintiff damages in the amount of $70,000. 2. I will hear the parties as to costs. -- 7 of 7 --