The award of additional damages of $400,000 was far greater than the actual loss suffered as a result of the copyright infringement.
The actual loss suffered from copyright, patent, trade mark or design infringement is often either small or difficult to quantify. Being able to claim additional damages ‒ which could be awarded for flagrant infringement, or the conduct of the infringer after the infringement ‒ could change the calculation significantly, and make an otherwise uneconomic claim worthwhile.
In APRA v Dion  FCCA 2330, the Federal Circuit Court has provided another example of why both rights-holders and alleged infringers should consider additional damages early on as part of their strategy.
The infringing conduct
Australasian Performing Right Association Ltd (APRA) represents Australian and New Zealand musicians and is responsible for the granting of licences for performances of its members' musical works. In 2014, APRA granted John Dion (also known by the alias John Denison) a licence to hold the Soulfest concerts on the condition that licence fees were paid in advance.
Shortly before the concerts, Dion sent a fake receipt to APRA which ostensibly recorded the transfer of the licence fees to APRA. This transfer never took place, meaning that the licence was not in effect at the time of the concerts. Consequently, the holding of the concerts constituted authorisation of infringement of the copyright in the musical works of APRA's members.
Dion's conduct following the initial copyright infringement
At the time of the judgment, Dion had not paid APRA any money in respect of the 2014 Soulfest concerts. In addition, he had failed to comply with the Court orders to pay compensatory damages. Dion had also failed to provide information to APRA about the 2014 concerts as required by the licence.
In 2015, Dion was granted a subsequent APRA licence in relation to a Soulfest concert to be held that year. Again, he failed to make the advance payment as required by the licence. APRA consequently obtained an injunction preventing Dion from holding the concert. Dion immediately cancelled the concert, stating untruthfully that the decision to cancel had been made because of poor ticket sales.
The Court's assessment of additional damages
The Court assessed compensatory damages at $34,822, but awarded far more in additional damages.
Judge Street was highly critical of Dion's conduct both at the time of, and subsequent to, the infringing conduct. He found that Dion's failure to pay the licence was a "flagrant" and "deliberate" infringement of the Copyright Act which had been carried out for the purposes of obtaining a financial benefit.
Factors that aggravated Dion's conduct included:
- Dion's "scandalous" dishonesty in providing the fake receipt to APRA;
- Dion's subsequent failure to pay fees for the 2015 Soulfest concert, and his decision to mislead the public about the real reason that these concerts were cancelled;
- Dion's lack of compliance with the Court's earlier order to pay compensatory damages;
- the substantial financial benefit that Dion obtained as a result of holding the concerts.
The Court emphasised its disapproval of the dishonest nature of Dion's conduct, and the need to deter Dion and others from engaging in similar conduct in the future. Taking into account all of these factors, the Court awarded additional damages of $400,000.
Remember the possibility of additional damages for IP infringement
This judgment serves as a reminder that the Court will impose tough penalties in circumstances where copyright infringement is blatant and involves dishonest conduct. If a business acts in a manner that is morally reprehensible, shameless or deceptive, the copyright owner could recover a sum far higher than the traditional award of compensatory damages.
In addition, businesses should be aware that conduct following acts of infringement will be taken into account when assessing additional damages. It's therefore important for businesses ‒ either as rights holders or potential infringers ‒ to seek legal advice as soon as possible following a potential infringement.