A recent decision on copyright infringement in building designs

On 13 October, Justice Beach of the Federal Court of Australia delivered his judgment in the case of Henley Arch v Lucky Homes & Ors, a copyright infringement case in respect of a project home design.

Mr and Mrs Mistrys were customers who, in 2013, went part way through the sales process with Henley Arch (Henley) for it to build them a house in accordance with its “Amalfi” design. The Mistrys paid Henley a deposit and plans were drawn up to build the house on the block that the Mistrys were purchasing. The Mistrys signed a standard Henley document acknowledging that Henley owned copyright in the plans and that the Mistrys were not entitled to use these (other than by building with Henley). While the Mistrys had initially wanted Henley’s “Avenue” façade option, after they learned that this would increase the price by about AUD10,000 they reverted to the standard option for the facade.

The Mistrys did not sign a final contract with Henley and instead approached Lucky Homes with the Henley plan (which featured Henley’s title block and copyright notice). Lucky Homes agreed to build the home for the Mistrys with the “Avenue” façade they preferred for about AUD10,000 less than Henley’s price (that is, Henley’s price for the house with the standard façade). The Mistrys ultimately engaged Lucky Homes, and it engaged a draftsperson to create a plan for the Mistrys’ house from the Henley plan, with a number of minor changes.

Henley commenced proceedings for copyright infringement against the Mistrys, Lucky Homes and its sole director and shareholder, Mr Shafiq. The Mistrys admitted that they had engaged in copyright infringement but claimed that they believed they were entitled to use the Henley plan and were therefore innocent infringers (and so not liable to pay damages). Lucky Homes and its director did not ultimately rely on this defence (they abandoned it at trial) but denied that the plan and house it created for the Mistrys reproduced a substantial part of the Henley plan. Justice Beach rejected these defences and found that all respondents had infringed Henley’s copyright in the Amalfi design by creating or authorising the creation of the Mistrys house and the plan for that house.

His Honour found that, notwithstanding some minor differences, “the substance and essential features” of the Amalfi plan had been copied and a substantial part of the plan was reproduced in the Mistrys’ house and plan. The plans in the case can be viewed in the judgment, which is published here: http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2016/2016fca1217

His Honour found that the Mistrys’ defence of “innocent infringement” was not made out as the Mistrys knew or ought to have known that creating the plan for the Mistrys House and the house itself from Henley’s design would infringe Henley’s copyright. His Honour was critical of the Mistrys’ evidence and found that they went to Lucky Homes in order to obtain the more expensive “Avenue” façade option for Henley’s standard option price.

The respondents were ordered to pay Henley AUD34,400 in compensatory damages (being the amount that Henley would have earned if the Mistrys had continued with it to build their home). Justice Beach found that the conduct of Lucky Homes and its director was flagrant and ordered them to pay Henley AUD25,500 in additional damages. This award was also made in order to deter them and others from engaging in similar conduct in the future and Mr Mistry was ordered to pay AUD10,000 in additional damages for the same reason.

This case serves as a warning to both customers and builders alike. The decision is a reminder of the risks involved in referring to another builder’s or designer’s work when creating a new home (even when some changes are made to the initial design) and demonstrates that doing so can result in orders to pay substantial amounts in damages.