The recent decision of the Western Australian Supreme Court (Milankov Designs & Project Management Pty Ltd v Di Latte & Anor [2018] WASC 14) provides a clear reminder to everyone in the construction, building or architecture industries of the importance of respecting other peoples’ copyright.
The Case
Nick Di Latte (the former Managing Director of the now-defunct Diploma Group of Companies) and his wife Carla had grand plans to build a glittering mansion in the affluent Perth suburb of Dalkeith, complete with its own boat ramp down to the Swan River. After shopping around for an architect capable of tailoring a home to meet their exacting needs, they settled on George Milankov, of Milankov Designs & Project Management (MDPM).
The Di Lattes entered into a contract with MDPM for the provision of design services. In essence the contract was split into two stages:
- MDPM would prepare a first set of concept plans, and then obtain Development Approval from the local council (Stage 1);
- Once the DA had been obtained, MDPM would prepare the technical construction and associated drawings (Stage 2)
There were separate fees payable by the Di Lattes at the end of each Stage. The fee for Stage 2 was considerably larger. MDPM would come to argue that the contract was structured such that copyright in the plans would be retained until Stage 2 had been completed.
By the end of Stage 1, MDPM had designed a 1,500 square metre mansion, the City of Nedlands had given the green light to start work, and MDPM had been paid their first part of the fee: that’s where this case took an unfortunate turn.
As can often happen with wealthy, demanding clients, tempers flared following the cancellation of a few meetings, and Messrs Di Latte and Milankov had a heated argument over the phone. As His Honour Justice Peter Martino held:
In the conversation Mr Milankov called Mr Di Latte an idiot and preceded that word with a well known offensive swear-word. Mr Milankov’s evidence was that Mr Di Latte swore at him, which Mr Di Latte denies.
And thus ended the relationship between the Di Lattes and MDPM (or so the Di Lattes thought).
The Di Lattes had copies of the plans which had been approved by the Council. MDPM wrote to the Di Lattes and put them on notice that:
- It owned the copyright in the plans, not them;
- They had no licence (or indeed any right at all) to use them; and
- If they proceeded to use the plans, in breach of MDPM’s copyright, then MDPM would pursue them for relief in accordance with the Copyright Act 1968.
In defiance of that notice, the Di Lattes engaged the services of their trusted architect Lawrence Scanlan & Associates (Scanlan) to finish the job. MDPM sued them both for (amongst other things) infringement of copyright. The Di Lattes said that they had bought the copyright, and that even if they hadn’t, they had a licence to use it however they chose. Scanlan said he was an innocent infringer.
Justice Martinos Decision
To begin with, Justice Martino confirmed that the architectural plans at the heart of this matter were original artistic works for the purposes of the Copyright Act.
The questions were, therefore:
- Whether the Di Lattes owned it?
- If they didn’t own it, whether they had a licence to it?
- If the answer to (1) and (2) was no, whether Scanlan could rely on an innocent infringer defence.
His Honour held that after terminating Stage 1, the copyright was retained clearly by MDPM. Going further, and citing an earlier case of the NSW Supreme Court, he held that while there are certainly cases where licences will be implied to use material protected by copyright when the contractual relationship has broken down (as was the case here):
…the implication of consent to use the plans in that way would not follow if the architect could be regarded as reserving a right to himself in the contract to continue with the subsequent stages.
In short, because the contract had been structured in a way that reserved the entitlement to complete the Stage 2 works for MDPM, no implied licence could exist. The Di Lattes were found to have infringed MDPM’s copyright in the plans by proceeding to engage a second designer to finish the job and build the house. Because Scanlan had been aware that the plans had been prepared by MDPM, and because MDPM had written to put Scanlan on notice, the innocent infringer defence didn’t stand up.
The Defendants were ordered to pay MDPM $157,825 by way of damages in respect of the licence fees, plus costs.
Marsdens Comment
The ownership of copyright is a tricky legal area, and can often by counterintuitive. As this case shows, the infringement of copyright can have serious legal ramifications.
Fortunately, there are a few things that you can take away from this (especially if you are a builder, architect or designer) that can make life a lot easier:
- Make sure your terms, conditions and contracts are crystal clear when it comes to:
- Who owns the IP you create;
- Under what circumstances it will be transferred, assigned or licenced; and
- What your rights under the contract will be if your IP rights are infringed.
- If you think someone is ripping off your copyright, you should immediately put them on notice in writing. If you know someone is ripping it off, there are ways of enforcing your rights.
- If you think you might be in danger of infringing IP, seek advice to save yourself a costly fight.
If you’re interested in reading the decision, it can be accessed at http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/wa/WASC/2018/14.html.
For further information on the above, contact Joseph Leith on jleith@marsdens.net.au or call on (02) 4626 5077.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
