A recent court decision reminds us that contractors who are engaged to perform work that may involve generation of copyright will own that copyright in the absence of an agreement assigning it.

Key takeouts

Justice Kelly's reasoning in Douglas v Racing Victoria Ltd & Anor [2019] FCCA 49 reaffirms important principles with respect to authorship, ownership and protection of copyright material.

If you use contractors to produce copyright materials, the contract should include express terms addressing the ownership of any intellectual property they generate.

Limited practical protection is granted to simple copyright works, with an exact or fairly exact reproduction required to establish infringement.

The Federal Circuit Court of Australia's decision in Douglas v Racing Victoria Ltd & Anor [2019] FCCA 49 is a useful reminder of the principles regarding copyright ownership and associated rights.

Justice Kelly reinforces that contractors are not considered in the same manner as employees when it comes to ownership of copyright, with contractors retaining ownership in the absence of an agreement to the contrary. Further, the subject matter of this case demonstrates the practical limitations of copyright protection in respect of simple copyright subject matter, with a higher threshold of reproduction required to establish infringement.

And we're off: background

Racing Victoria is the authority governing thoroughbred racing in the State of Victoria. As part of this role, it runs a yearly awards ceremony at which medals are presented to recognise the achievements of jockeys and trainers.

In 1996, Mr William Douglas, a jeweller known for producing sporting wares, was commissioned to design and produce the medals. He was supplied images of celebrated jockeys and trainers from the past, who were to be depicted on the medals. Mr Douglas produced a series of concept drawings in return.

A set of dies was required to imprint the requisite design on each medal's face. As Mr Douglas himself was not a toolmaker, he retained Mr Bill Forwood to produce the necessary dies and blanking tools. Mr Forwood was instructed to produce the dies 'as per [Mr Douglas'] sketch'. Mr Forwood was also provided with the same images Mr Douglas was given when he first produced the concept designs.

The medals, once manufactured using the dies produced by Mr Forwood, were provided to Mr Douglas who then, in turn, supplied them to Racing Victoria. Mr Douglas provided the medals to Racing Victoria each year until 2004. Subsequently, Racing Victoria changed its supplier and, in 2007, appointed Design Awards Pty Ltd to produce the medals.

That same year, following a newspaper publication covering the 2007 awards ceremony, Mr Douglas claimed that Racing Victoria had infringed his copyright by requesting that Design Awards produce medals replicating the designs on the medals he had supplied. He entered into a settlement with Racing Victoria, which included a requirement that Racing Victoria deliver all remaining copies of the original medals.

Following this, Design Awards was commissioned to produce new designs for the medals, still depicting the same individuals as had been pictured on the earlier medals.

In 2016, Mr Douglas observed a medal of similar design in an advertisement by Racing Victoria. He issued the current proceedings against Racing Victoria and Design Awards, claiming breach of copyright, breach of contract, misleading or deceptive conduct and fraudulent concealment with respect to production of the medals.

Turn 1: Mr Douglas was not the author

Justice Kelly rejected Mr Douglas' argument that he was the author of the medals (which are sculptures and therefore artistic works) for the purposes of the Copyright Act 1968 (Cth). In doing so, His Honour examined both the development of the designs and the physical process required to produce the pressed medals.

There is no copyright in an idea, so Mr Douglas could not rely on the concept of medals depicting the relevant racing identities to support his claim of copyright ownership. Further, Mr Douglas did not own the images he relied upon when designing the medals – these images were in the public domain. Although Mr Douglas had produced concept designs and sketches for the medals, he did not produce the dies required to cast the medals into the required shape. Those dies (and, accordingly, the medals themselves) were created by Mr Forwood. His Honour found that Mr Douglas had not given Mr Forwood copies of the concept drawings with directions to reproduce them; instead Mr Forwood was supplied the photographs of the individuals who were to be depicted on the medals. Although Mr Douglas may have provided Mr Forwood with verbal guidance as to these depictions, copyright did not subsist in these ideas. It was Mr Forwood who drew the final images as they appeared on the medals by using the dies and tools which he created, and as noted by His Honour, 'the final expression of the idea comprised in the dies from which the medals were cast had been Mr Forwood's and the designs embodied in those dies had been the product of his exertion, labour and activity'. It was, therefore, Mr Forwood who was the author of the works.

Turn 2: Mr Douglas did not own the copyright

His Honour then examined the relationship between Mr Douglas and Mr Forwood to establish whether copyright in the works was assigned or granted to Mr Douglas by way of agreement. Mr Douglas retained Mr Forwood to produce the dies, with Mr Forwood submitting an invoice to Mr Douglas claiming payment for his work, but no evidence was presented as to the express terms of the agreement through which Mr Douglas retained Mr Forwood. His Honour made reference to the principle set out in Robin Ray v Classic FM (1998) 41 IPR 235 that 'the mere fact that the contractor has been commissioned is insufficient to entitle the client to the copyright' and 'the contractor is entitled to retain the copyright in default of some express or implied term to the contrary effect'. On this basis, the copyright in the medals as artistic works had not been assigned by Mr Forwood to Mr Douglas.

The home stretch: there was no copying

His Honour continued to examine whether the Design Awards medals infringed the copyright in the medals supplied by Mr Douglas. In keeping with his previous comments on the issue, His Honour confirmed that the images of the honoured racing identities were themselves not entitled to copyright protection, because these depictions were based on pre-existing subject matter in the public domain. What was able to be protected was 'ownership of the original work comprised in the author's individual design'.

This is consistent with Justice Dodds-Streeton's reasoning in Seafolly Pty Ltd v Fewstone Pty Ltd (2014) 313 ALR 41 that 'it will not infringe copyright… to take aspects that did not originate with the author but only attracted copyright protection when incorporated into a collocation assembled by the exercise of skill and judgment'.

His Honour also made reference to principles advanced in Wildash v Klein (2004) 61 IPR 324 ('the more commonplace and simple the work the more closely must it be copied for any infringement to occur') and Roland Corporation v Lorenzo and Sons Pty Ltd (1991) 33 FCR 111 ('their simplicity will produce the result that only an exact or fairly exact copy will infringe'), and determined that copying in this case would need to be of very close degree, or a substantial part of the original work. Applying this reasoning, His Honour held that medals produced by Design Awards did not resemble those of Mr Douglas. While Mr Douglas focussed on the fact that Design Awards used a coloured border on their medals, which was an element of his medal designs, His Honour did not consider this element sufficiently original to establish substantial reproduction.

Mr Douglas' infringement argument was also complicated by the fact that any concept drawings authored by Mr Douglas were not replicated in the medals he supplied, and the drawings themselves had not been provided to Design Awards. As such, His Honour found that no copyright infringement had occurred.

First past the post: Racing Victoria

In accordance with the above reasoning, His Honour held that the copyright infringement claim should be dismissed. His Honour also dismissed the subsidiary claims based on fraudulent concealment, contravention of the Australian Consumer Law and breach of the settlement deed, given the interrelationship between these claims and the question of copyright ownership.

Key takeaways

If you are considering utilising an independent third party to complete tasks which would involve the creation of materials that attract copyright protection, you must ensure you have the correct agreements in place to protect your interests. You will not automatically own or have exclusive rights to that copyright, even if you have paid for its creation, in the absence of a written agreement setting this out.

Further, it is important to appreciate the limited practical protection granted to simple copyright works. Although such works may attract copyright protection, their simple nature demands that an exact or fairly exact reproduction is required to establish infringement.