Copyright

Case Note: Lott v JBW & Friends Pty Ltd. and Another  

John Lambert
3 Jan 2002
This case first appeared on the Old Colony House website

In this appeal from the magistrate, Mullighan J had to consider:

(a) the subsistence of copyright in a computer generated arrangement of the words "Opera in the Outback" against a dark background referred to in the judgment as "the graphic bar";
(b) the liability of a director for the authorizing the reproduction of the bar without the author's licence; and
(c) the measure of damages including additional damages under s. 115 (4) of the Copyright Act (Commonwealth) 1968, which was the equivalent of s. 97(2) of the Copyright, Design and Patents Act 1988.

The graphic bar had been designed by the respondents as part of a brochure for a company called Opera in the Outback Pty Ltd. RR charged the appellant A$17,591.96 for that work and there was a dispute over that fee which the company never paid. Without RR' express permission, the company reproduced the graphic bar with some minor alterations in a series of advertisements. The company subsequently went into administration whereupon RR sued the appellant, the managing director of the company in administration, for their design fee and for infringement of copyright of the graphic bar. The magistrate dismissed the contract claim finding that the brochure had been ordered by the company and not A but held that A had infringed the copyright in the graphic bar by causing it to be reproduced in newspaper advertisements on numerous occasions. He awarded A$8,000 to R to cover compensatory and additional damages.

The Decision
Mullighan J dismissed the appeal on infringement but reduced the damages to A$1,000. He rejected A's submissions that the graphic bar was neither an artistic work in that it was not "a painting, sculpture, drawing engraving or photograph ….. a building or model of a building …. or …… a work of artistic craftsmanship…." nor a literary work. Relying on Miller & Lange Ltd. v Polak [1908] 1 Ch 433 and Roland Corporation and another v Lorenza & Sons Pty Ltd. (1991) 33 FCR 111, his honour held that it was a drawing. He rejected the argument that, taken in isolation, it was too insubstantial and too simple to qualify for copyright:

"The graphic designer had to create a design and make choices about the layout, font, colour and dimensions of each part of the design………The selection of the font from a computer program is no less creative than manual drawing."

He concluded that it was an original artistic work in which copyright subsisted and that RR were the first owners of that copyright.

Directors' Liability
The Australian test of whether a director should be liable for the infringing acts of his company had been established by Lindgren J in Microsoft Corporation and Another v Auschina Polaris Pty Ltd. and others (1996) 36 IPR 225, 235:

"(1) Infringement of copyright is treated as tortious: c.f. WEA International Inc. v Hanimex Corporation Ltd. (1987) 17 FCR 274 at 283.
(2) Where copyright is infringed by a corporation, the question of the nature and extent of involvement on the part of a director necessary for him or her to be personally liable in respect of the infringement is not answered by principles dealing with joint tortfeasors, or by the notion of 'authorization' as it is used in copyright statutes: WEA at FCR 283.
(3) The principles governing vicarious liability of an employer for the torts of its employee do not govern the present question: WEA at FCR 283.
(4) The holding of an office in a company, such as that of director or even managing director, does not itself suffice to render the office-holder liable.
(5) It is not necessary that the director knows that the conduct in question is tortious.
(6) In any particular case it is necessary to assess closely the director's conduct and its relationship with the tortious conduct for which the company is liable."

After analysing the authorities Lindgren J had discerned two approaches which he described as the "making the tortious act his own" test and the "procured or directed test". He preferred the latter test and so did Mullighan J. In his honour's view, however, A would have been liable under either test:

"It was his idea encouraged by the major Events Committee. He formed the Company for this specific purpose. A Mr. Robertson owned 45% of the shares and was responsible for finance. A and [his son] owned the remainder of the shares. As has been mentioned, A was the Chairman of Directors of the Company. He was the director of the event. He said in evidence that 'anything to do with the way the event appeared or that happened at the event' had to have his approval. His evidence establishes that he was involved in every matter of significance with regard to the planning, organization and promotion of the event. He said that the advertisements placed with The Advertiser were paid partly by a contra arrangement as t was a sponsor and partly in cash. He was aware of RR' claim of copyright and he decided to proceed with the advertisements regardless."

Further, the evidence established that A had also infringed RR’ copyright.

Additional Damages
Mullighan J disturbed the damages award because the magistrate had used "a broad brush" while making an allowance for flagrancy. The evidence before the magistrate was that A's expert witness (who was also a graphic designer) would have assigned copyright for anything between A$1 and A$20 while RR' said that the appropriate charge would have been A$250. In view of the frequency of the infringements and A's knowledge of the copyright claim the magistrate had been right to find flagrancy but not to the extent of many thousands of dollars. In his judgment, the appropriate award was A$1,000 of which A$250 was compensatory damages and the rest additional statutory damages.

Comment
A point that might have been argued was that the beneficial ownership of the copyright passed to the company when it commissioned the brochure. When a third party infringes copyright most graphic artists are willing to assign their copyrights to their customers either free of charge or for a nominal sum to enable them to take proceedings. There was some evidence before the court to that effect. A's expert, for example, would have assigned his copyright for a dollar and even RR' fee of A$250 in respect of a design project worth A$17,591.96 is not inconsistent with that argument. The fact that RR might not have been paid in full was irrelevant because they were entitled to a dividend in the administration.
 

Important