In August last year, this blog discussed the Queensland Supreme Court decision of Coles v Dormer. That case involved copyright infringement of house plans and the building of a copycat house in a Cairns suburb. To remedy the infringement, the Court had awarded an injunction requiring remedial works to the front of the house.
In February, the Court handed down a further judgment for damages (Coles v Dormer (No 2)  QSC 28). It ordered $70,000 be paid, on top of the more than $40,000 spent on remedial works. Most of this damages bill was classed as 'additional damages' based on the defendants' conduct and the context of the infringement. It is a reminder of the Court's flexibility in awarding remedies in copyright cases, as well as their willingness to penalise flagrant or bad faith behaviour.
The story so far
In 2009, house plans had been prepared by an architect. Once the house was built, the plaintiff Coles purchased it. The defendant Bredens sought out the builders of the original property, commissioning them to replicate it down the road. Coles, having learned of this, obtained an assignment of the copyright to the house plans from the architect. Despite repeated correspondence from Coles that the construction infringed his copyright, work had been substantially completed on the copycat house by the time the matter reached the Supreme Court.
At judgment, the Court had awarded an injunction under section 115(2) of the Copyright Act, requiring alterations to be made to the exterior of the copycat house. Section 115(2) also includes as remedies 'either damages or an account of profits' and the plaintiffs elected for an award of damages.
Two types of damages under the Copyright Act
Coles was entitled to damages under two heads.
- Damages under section 115(2) of the Copyright Act that were compensatory and in addition to the injunction already ordered; and
- Further 'additional damages' under section 115(4), which are not compensatory and can be awarded based on the 'flagrancy of the infringement' and other contextual matters.
Each type of damages related to a different aspect of the dispute, but the Court would nonetheless order damages under both heads.
The purpose of compensatory damages in the Copyright Act is to compensate the loss suffered by the plaintiff because of the infringement. In this case, the Court sought to compensate the plaintiff for both his past loss of enjoyment from the infringement, as well as the minor future loss of enjoyment that would stem from the knowledge that the interior of the copycat house remained a largely unaltered replica of his own.
For this, the Court awarded an amount of $10,000 as compensatory damages. The amount was also calculated to recognise the $43,750 spent by the defendants in the remedial works, which had substantially minimised the plaintiff's loss.
The effect of additional damages under section 115(4) is to penalise the behaviour of defendants for their infringing conduct and also for their conduct after being approached by the copyright owner. In this case, the Court found that the defendants had not acted in good faith and had built the copycat house even after been told by Coles that he held the copyright to the design. The defendants' behaviour was 'a calculated commercial risk in the pursuit of their own benefits' and indeed they continued to deny any infringement all the way until judgment.
The defendants' continued infringement was flagrant and their persistence and general course of conduct after being warned by Coles were further relevant matters for awarding damages. Even though the Court acknowledged the money spent on remedial works, it ordered that $60,000 be paid as additional damages.
Conclusions and lessons
In all, the defendants have been required to spend over $110,000 as a direct result of their infringement. The lion's share of this is payable as additional damages referrable to the defendants' conduct, from the circumstances of their initial infringement all the way to the judgment of the Supreme Court. The lesson to be taken is that even in circumstances where the loss from infringement by a copyright holder is marginal, the behaviour of infringers will be scrutinised by the court and may be the basis of a substantial additional damages bill.