178 I agree with LED that the principle that "the plaintiff must take the business of the infringer as it is" applies (Dart v Décor at 133 per McHugh J). While in that case McHugh J was seeking to make the point that the plaintiff cannot claim that the defendant could have made a greater profit by using its resources more efficiently, it is similarly the case that the infringer cannot claim overheads which were not in fact incurred but might reasonably have been incurred.
179 Second, LED submits that the superannuation contributions of $90,796, $139,228 and $374,164 made between 1992 and 1994 on account of Mr and Mrs Cardile should be ignored. According to Cartwright, "contributions of this level are generally made for tax planning purposes and do not contribute to, nor benefit, the project homes business". Valeri agreed that he did not see those expenses as being "directly attributable to the business of building houses of the company". Eagle, on the other hand, submits that the question is not whether the superannuation payments are too high but whether the remuneration package as a whole is above the market level.
180 I do not accept Eagle's submission that the superannuation payments made by Eagle should be seen as part of a salary package. The payments appear to be unrelated to any "salary package": they appear suddenly in 1992 when the directors' salaries increased rather than decreased as might have been expected if salary and superannuation were complementary elements of a single package. The superannuation payments then rise sharply over the next two years while the directors' salaries also rise. They then disappear in 1995 and do not appear in 1996 while the directors' salaries decrease. The payments are so irregular that I do not see a basis for inferring that they form part of a salary package and therefore part of the cost of the construction of the houses. For these reasons I do not think they can be taken into account as part of the overheads relevant to the building of the houses.
181 Would an attribution to overheads pro rata according to revenue still allow Eagle to retain some of the profits made by its infringements? In Kettle Chip Co Pty Ltd v Apand Pty Ltd (No 2) (1998) 83 FCR 466 ("Kettle Chip"), decided since the conclusion of the hearing of the present proceedings, Burchett J stated, after referring to passages from Dart v Décor, above, as follows (at 471):
" ... the ground of the allowance of these overheads (the question only arises in the case of fixed overheads, since there is no dispute that the appropriate amount of variable overheads must be allowed) involves a matching of the contribution made by the particular overheads to the manufacture of the infringing product with the contribution that the same overheads would have made to the manufacture of the alternative. The logic is that, since the infringing product did not cause any increase in these fixed overheads, no part of it is an expense except upon the opportunity cost principle, which allows it only because the manufacture of the infringing product has involved the forgoing of the opportunity to recoup this expenditure."
182 In that case, there was evidence that if the respondent had not passed off its potato chips for those manufactured by the respondent, it would have sold a different brand of its own chips, the sales of which were "at an average rate of about 23 per cent of that achieved by" the applicant's brand.
183 His Honour thought that sales of the respondent's alternative might have improved to 30 per cent. Consistently with the passage set out above, his Honour concluded that in these circumstances the amount of fixed overheads to be deducted was 30 per cent of the overheads attributable to the infringing product. Another way of expressing his Honour's conclusion is to say that if the respondent were not required to account for so much of the fixed costs recouped by the infringing brand of chip as would not have been recouped by the alternative brand of potato chip (70 per cent), then to that extent the respondent would not be required to account for the whole of the profit derived from the infringement.
184 The issue of allowance of a percentage of fixed overheads on the basis identified by his Honour was not argued before me. If LED wishes to raise the matter it should notify my Associate accordingly. Nothing in these Reasons for Judgment is intended to detract from its right to apply for leave to make submissions on the issue.
Issue 6
6. With respect to plans held to infringe, where there are no houses built in accordance with the plans, what is the appropriate measure of damages?
185 This issue relates to the seven plans in my category 2 earlier, that is, plans 13, 14, 24, 33, 38, 40 and 42, in accordance with which no houses were built and to plan 39 (in my category 1), in accordance with which a house was built but sold at a loss rather than a profit to Eagle.
186 LED submits that one applicable measure of damages may be the loss of profit it suffered as a result of the infringement, in this case the loss of sales which LED would have made to the customers who in fact dealt with Eagle: cf Allibert SA v O'Connor [1982] FSR 317 at 319-320; Colombia Pictures Industries v Robinson [1988] FSR 531 at 536. In the two cases just cited, it was concluded on the evidence that if the infringer's goods had not been sold the plaintiff's goods would have been. Accordingly, if the infringer sold 10,000 items, the copyright owner was entitled to the amount of profit it would have made if it had sold 10,000 of its own items. In the present case the reason why Eagle did not make a profit was that in the first seven cases the customers did not proceed at all and in the remaining case (plan 39) Eagle's costs exceeded the sale price. I do not that think that the "foregone profit on notional sales by LED" is an appropriate measure of damages. It has simply not been shown that in the absence of the infringement, these customers probably would have contracted with LED to its profit. In other words, I am not persuaded the infringement caused LED to miss out on a profit it would otherwise have made: cf Manfal Pty Ltd v Longuet (1986) 8 IPR 410 (Qld/Thomas J) at 422; New England Country Homes Pty Ltd v Moore (1998) AIPC ¶91-410 (FCA/Burchett J) at 37,257.
187 An alternative approach to assessing damages contended for by LED is to apply a "notional licence fee" approach, that is, to determine the amount LED would have charged Eagle to use its plans in the ways in which Eagle did use them: see Inverugie Investments Ltd v Hackett [1995] 1 WLR 713 at 717-718; New England Country Homes Pty Ltd v Moore, above, at 37,257 and the cases there cited. LED submits that an appropriate licence fee is 6 per cent of the average construction contract price for houses built in accordance with the class of LED plan in question during the year in which the particular infringing Eagle plan was drawn. Eagle agrees that the notional licence fee approach is appropriate. However, it submits that the appropriate fee lies somewhere between 1 and 2 per cent of Eagle's construction cost.
188 I note that Thompson, the General Manager of LED, gave evidence that unlike Eagle, LED has not in fact licensed another company to use its floor plans in the Sydney region (in which LED operates) because most of its own sales occur in that region and LED wishes to "retain all the profits from building a house in the Sydney region rather than sharing those profits with a licensee". In Autodesk Australia Pty Ltd v Cheung (1990) 94 ALR 472 at 474-477, Amalgamated Mining Services Pty Ltd v Warman International Ltd (1992) 111 ALR 269 at 286 and Columbia Pictures Industries Inc v Luckins (1996) 34 IPR 504 at 509-510, it was considered that while a notional licence fee approach offered guidance, it was not straightforwardly applicable in cases such as the present one, where the copyright owner would not have granted a licence or where the infringer would not have taken one. However, in the absence of a more appropriate measure of damages and in the light of Eagle's acceptance of the notional licence fee approach, I think it appropriate in the first instance to determine what the amount of damages assessed on that basis would be and then to review that amount in the light of all the circumstances and of the fact that the damages are at large.
189 The evidence in relation to the appropriate amount of licence fee is not entirely satisfactory. LED points out that Vella, the expert accountant called by Eagle, applied a notional licence fee of 5 per cent of construction contract price in some of his calculations and said in evidence that this percentage had been given to him by "someone on behalf of Eagle". Eagle submits in response that Vella's use of 5 per cent of construction contract price does not constitute an admission by Eagle and that the percentage figure is unreliable as Vella cannot remember who gave it to him and it is inconsistent with other evidence to which I refer to below. I agree.
190 There is in evidence a practice note issued by the Royal Australian Institute of Architects that suggests that for the design of a residential home costing between $70,000 and $100,000, an architect might charge a fee of between 14 and 16 per cent of construction cost. However, LED concedes that the work to be undertaken by an architect in designing an individual residential home is very different from the work done by a person, usually a draftsperson, in designing a project home. I therefore do not derive much assistance from this document.
191 Thompson gave evidence that in 1988, LED granted to a company called "Juelle Pty Ltd" ("Juelle") a licence to use some of its designs in building houses in the Central and Mid-North Coast regions of New South Wales. The agreement was apparently oral until 28 February 1994 when a written agreement was entered into. The fee was originally 5.5 per cent of gross income and rose to 6 per cent in 1993. However, the fee included a sales commission payable to Molotap Pty Ltd, a company of which Haigh, the sales director of LED, was the "principal" and a director. Thompson said that, excluding this commission, the fee was 3.25 per cent in 1988 rising to 3.5 per cent in 1993. He also said that the licence fee would have been higher if the "principal" of Juelle had not been a friend of Larry King, a director of LED.
192 Eagle points out that the agreement with Juelle was a franchise agreement which provided to the franchisee other benefits including use of the franchise name ("Beechwood Homes"), territorial exclusivity, training for Juelle's staff, access to LED's "procedures, business methods, forms, policies and promotional programmes", and a marketing and advertising service only half the cost of which was to be met by Juelle. Eagle also submits that although LED may have sought to charge more to someone who was not a "friend", there is no evidence that such an "arm's length" party would have agreed to pay a higher fee.
193 There is also in evidence a confidential exhibit containing a number of a agreements which LED submits were "arm's length" transactions between designers and builders in which a commission of 6 per cent of "contract price" was charged. Eagle points out that, as in the case of the agreement with Juelle, these agreements were not merely licences to use floor plans. They included, for example terms by which the licensor was to "obtain approvals from local government authorities" to "assist [the] owner of [the] building site to arrange [a] housing loan where necessary" and to advertise the plans at its (the licensor's) expense. Therefore these agreements do not establish that a licence fee in the order of 6 per cent of contract price is appropriate.
194 Kollar, an expert architect called by LED, gave evidence that as a rule of thumb, an architect's fee to design a house, prepare the plans and "take the matter to building approval stage with the local council" would be between 3 and 5 per cent of the total building cost. For preparing a sketch plan, however, he said that a much lower fee of "1 to 1˝ per cent maybe 2 if it's a very small complex building" would be charged and that the amount would probably be 1 per cent.
195 Smith, one of the expert architects called by Eagle, gave evidence that the architect's fee "for the full service" (including contract administration) for a house costing between $100,000 and $200,000 to build would be between 10 and 15 per cent of construction cost. He said that the fee for making schematic drawings alone would be between 10 and 15 per cent of that fee (that is, between 1 and 2.25 per cent of construction cost).
196 In the present case, Eagle took LED's "sketch plans" or "schematic design". The fee charged by an architect for preparing such drawings is not necessarily commensurate with the licence fee that would be charged by the owner of the copyright in such drawings already in existence and being used by the copyright owner in its own business, as is the case here. A premium may be demanded and paid in the latter class of case because the plan has already proved to be popular. On the other hand, the ongoing competition from the copyright owner itself would reduce the value of the licence to the licensee. Moreover, where several houses are built based on the same schematic drawings, it is unlikely that the architect would receive a full fee in respect of each building. However, I think this a better guide than the agreements to which LED points in support of its claim for a licence fee of 6 per cent of contract price. Considering all of this evidence, I think a reasonable licence fee according to the project home industry for the use of LED's plans to be 2 per cent of construction cost.
197 I can now turn to the individual plans. Plan 39 was a customised Flamingo Classic plan drawn in 1992. It was the only Flamingo Classic built in 1992 and was built at a cost of $74,849. Damages assessed in respect of plan 39 at 2 per cent of $74,849, would be $1,496.98.
198 As there were no houses built in accordance with the remaining seven customised plans, there is no evidence of the cost of construction of a house in accordance with them. The parties seem to have proceeded on the basis that the average cost of construction of a house built in accordance with the relevant type of generic infringing Eagle plan during the year in question should be adopted. This approach seems reasonable.
199 Plan 13 was a customised Flamingo Premier plan drawn in 1993. Only one Flamingo Premier was built in 1993. It was one of the original fifty seven - a house built at Lot 269 Swan Circuit, Hinchinbrook. Its construction cost was $76,662. Damages assessed in respect of plan 13 at 2 per cent of $76,662 would be $1,533.24.
200 Plan 14 was a customised Flamingo Premier plan drawn in 1994. Three of the original fifty seven houses were Flamingo Premier houses built in 1994. Their average construction cost was $77,498. Damages assessed in respect of plan 14 at 2 per cent of $77,498 would be $1,549.96.
201 Plan 24 was a customised Oriole 4 Mk I plan drawn in 1995. Seven Oriole 4 Mk I houses were referred to in evidence as having been built by Eagle in 1995 (six of the original fifty seven plus the house built in accordance with plan 22 of the further forty six plans). Their average construction cost was $69,487. Damages assessed in respect of plan 24 at 2 per cent of $69,487 would be $1,389.74.
202 Plan 33 was a customised Oriole 4 Mk II plan drawn in 1994. Three Oriole 4 Mk II houses were referred to in evidence as having been built by Eagle in 1994 (two of the original fifty seven plus the house built in accordance with plan 34 of the further forty six plans). Their average construction cost was $68,816. Damages assessed in respect of plan 33 at 2 per cent of $68,816 would be $1,376.32.
203 Plan 38 was a customised Flamingo Classic plan drawn in 1993. Two Flamingo Classic houses were built in 1993 (one of the original fifty seven and the house built in accordance with plan 39 of the further forty six plans). The average construction cost of these houses was $74,331. Damages assessed in respect of plan 38 at 2 per cent of $74,331 would be $1,486.62.
204 Like plan 38, plan 40 was also a customised Flamingo Classic plan drawn in 1993. Damages assessed in respect of plan 40 on the same basis would also be $1,486.62.
205 Plan 42 was a customised Flamingo Regular plan drawn in 1992. There were no Flamingo Regular houses built in 1992. There were, however, two Flamingo Regular houses built in 1995 as well as one in 1994. The average construction cost in respect of these three houses was $69,714. Damages assessed in respect of plan 42 at 2 per cent of $69,714, would be $1,394.28.
206 The above assessments would give a damages total of $11,713.76. But this figure does not, in my view, adequately reflect the facts that LED and Eagle were in competition in the same market, that the LED plans were notably successful and that LED would not, in fact, have granted a licence to Eagle. Assuming, contrary to the evidence, that LED would have been prepared to grant Eagle licences at all, in my opinion it would have insisted that Eagle pay a greater sum. For its part, faced with that insistence, Eagle would have contemplated making gross building profits of some $160,000 under the licenses (8 x $20,000 being the approximate average gross profit made on project homes built in accordance with infringing Eagle plans as discussed earlier). Eagle would have understood that its chance of making those profits would be greater by the use of the LED copyright plans in question than without them. For that improved chance I think that Eagle would have been willing to pay more than $11,713.76.
207 I assess LED's damages in the sum of $20,000.
Issue 12
12. Given that LED has, in respect of the original 57 houses, elected for an account of profits:
(a) is it also entitled to claim additional damages?
(b) if additional damages are available is this an appropriate case for additional damages and what matters inform the court's discretion in assessing them?
(c) what is the appropriate amount of additional damages?
208 It will be recalled that LED elected for an account of profits in respect of the fifty seven plans disclosed by Mr Valeri in his affidavit of 13 September 1996 as well as in respect of thirty four of the forty five plans disclosed subsequently. It claims damages in relation to the remaining eleven plans disclosed subsequently. LED also claims additional damages.
209 Additional damages are provided for in s 115 (4) of the 1968 Act. Section 115 provides as follows:
"(1) Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright.
(2) Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.
(3) Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.
(4) Where, in an action under this section:
(a) an infringement of copyright is established; and
(b) the court is satisfied that it is proper to do so, having regard to:
(i) the flagrancy of the infringement;
(ii) any benefit shown to have accrued to the defendant by reason of the infringement; and
(iii) all other relevant matters;
the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances." (emphasis supplied)
The parties are in dispute as to whether, in relation to the ninety one plans in respect of which LED has claimed as account of profits, the Court has power to award it additional damages.
210 Eagle submits that s 115 draws a clear distinction between damages and an account of profits. It relies on the concluding words of s 115 (4) emphasised above. It points to the facts that an account of profits is an alternative remedy to damages (s 115 (2)) and that an account of profits may be awarded in respect of an "innocent" infringement while damages may not be (s 115 (3)). In these circumstances, it submits, it is impossible to read the reference in s 115 (4) to the Court's awarding of additional damages "in assessing damagesfor infringement" as including its awarding of additional damages "in ordering an account of profits". Moreover, s 115 is a statutory codification, and to some extent modification, of common law and equitable remedies. While additional (or exemplary) damages are available at common law, "there is much to be said for the … view … that 'equity and penalty are strangers'": Bailey v Namol Pty Ltd (1994) 53 FCR 102 (FC) at 113.
211 The present issue was recently considered by the House of Lords in Redrow Homes Ltd v Bett Brothers Plc [1999] 1 AC 197. The sections of the Copyright, Designs and Patents Act 1988 (UK) ("the UK Act") under consideration in that case provide as follows:
"96 (1) An infringement of copyright is actionable by the copyright owner.
(2) In an action for infringement of copyright all such relief by way of damages, injunctions, accounts or otherwise is available to the plaintiff as is available in respect of the infringement of any other property right.
(3) This section has effect subject to the following provisions of this Chapter.
97 (1) Where in an action for infringement of copyright it is shown that at the time of the infringement the defendant did not know, and had no reason to believe, that copyright subsisted in the work to which the action relates, the plaintiff is not entitled to damages against him, but without prejudice to any other remedy.
(2) The court may in an action for infringement of copyright having regard to all the circumstances, and in particular to -
(a) the flagrancy of the infringement, and
(b) any benefit accruing to the defendant by reason of the infringement,
award such additional damages as the justice of the case may require."
212 These provision do not distinguish between damages and an account of profits as clearly as s 115 of the Act does. Subsection 97 (2) does not, as did its predecessor s 17 (3) of the Copyright Act 1956 (UK) and as does the Australian provision, confer upon the court power to award additional damages "in assessing damages for infringement". Nevertheless, the House of Lords held that additional damages were not available where an account of profits was claimed. Lord Jauncey of Tullichettle considered that such a result was dictated by the expression "additional damages" itself. He said (at 207):
"The words 'additional damages' without further explanation or qualification immediately provoke the question 'additional to what?' The natural and ordinary meaning is additional to other damages already assessed, or as the respondent put it succinctly 'more of the same.'"
Lord Clyde also considered that "additional damages" were apt to refer to "an addition to an award of damages" rather than damages additional to any form of relief whatever that may be available (at 208). It is worth noting that his Lordship thought that the result had been even clearer under s 17 (3) of the Copyright Act 1956 (UK) which, as noted above, had contained the words "in assessing damages for infringement" as does s 115 (4) of the 1968 Act.
213 In Concrete Systems Pty Ltd v Devon Symonds Holdings Ltd (1978) 20 SASR 79, Legoe J said (at 84-85) that s 115 (4) of the 1968 Act is
"not directed in its terms purely to compensatory damages and it therefore appears that the English decisions on exemplary damages and on a somewhat differently cast section under the Copyright Act 1956 (UK) are not appropriate".
214 With respect, as I have said earlier, it seems to me that the distinction between damages and an account of profits is clearly drawn in s 115 and in my view the expression "in assessing damages for the infringement" is intended to refer only to compensatory damages. I also note that Legoe J's decision was interlocutory and hence he was not called upon to assess damages: rather, his Honour was putting forward the adequacy of a monetary remedy in cases of copyright infringement as a reason for refusing an interlocutory injunction. LED also refers to Aitken v Neville Jeffress Pidler Pty Ltd (1991) 33 FCR 418 (Gummow J) at 423 as providing some support for the proposition that additional damages may be awarded where an account of profits is claimed. However, with respect, in my view that case does not provide any assistance in resolving the present question.
215 In International Credit Control Ltd v Axelsen [1974] 1 NZLR 695, Mahon J accepted that additional damages could be awarded when an account of profits was taken, although he concluded that such an award was not warranted on the facts. The relevant provision of the New Zealand Act, like s 115 (4) of the Act, referred to an award of "additional damages" "in assessing damages for the infringement". However, his Honour did not deal with the present issue. Rather, he appears simply to have assumed, no doubt in the absence of any submission to the contrary, that additional damages were available. Similarly in Wellington Newspapers Ltd v Dealers Guide Ltd [1984] 2 NZLR 66, the New Zealand Court of Appeal assumed without discussion that additional damages could be awarded where an account of profits was sought: at 70 (McMullin J), 73 (Somers J), 78 (Greig J). In that case what was said was only by way of obiter dicta, as the plaintiff in fact claimed and was awarded compensatory damages and the real issue was whether additional damages could be exemplary or punitive in nature.
216 It is true, as LED submits, that the 1968 Act has "objectives other than compensation" including "an element of penalty": Raben Footwear Pty Ltd v Polygram Records Inc (1997) 145 ALR 1 (FCA/FC) at 6 per Burchett J, with whom Lehane J agreed; Autodesk Inc v Yee (1996) 139 ALR 735 (FCA/Burchett J) at 738-739. In the former case, Burchett J referred with apparent approval to the statement by Laddie J in Cala Homes (South) Ltd v Alfred McAlpine Homes East Ltd (No 2) [1996] FSR 36 at 43 that additional damages are "a head of relief independent of and not dependent upon whatever form of financial relief the plaintiffs seek". Laddie J had held that additional damages were available where an account of profits was claimed. However, his decision was expressly overruled by the House of Lords in Redrow Homes Ltd v Bett Brothers Plc, above,at 207.
217 I also do not think that in the Raben Footwear case Burchett J was in any way adverting to the issue presently before me. The words from the Cala Homes case were relied on in support of the proposition that additional damages need not be limited where the award of compensatory damages is small, that is, the amount of additional damages is independent of the amount of compensatory damages. In the Raben Footwear case the Full Court upheld the trial Judge's award of $275 compensatory damages and $15,000 additional damages, saying that the trial judge had a broad discretion in awarding additional damages and that "[a]lthough ... the amount [the trial judge] adopted was at the upper limit of the range that was available to him", it was not beyond that range: at 7.
218 I think that in referring to the award of "additional damages" "in assessing damages for [an] infringement", s 115 (4), does not permit an award of additional damages where an account of profits is sought. While additional damages may be obtained where only nominal damages are sought under s 115 (2) with substantial conversion damages being sought under s 116 (Polygram Pty Ltd v Golden Editions Pty Ltd (1997) 148 ALR 4 (FCA/Lockhart J)), I do not think that the word "damages" in s 115 (4) can be read as including a reference to profits required to be accounted for, when it clearly cannot be so read in s 115 (2) or (3). Nothing in the Second Reading Speech for the 1968 Act or in the Spicer Committee Report of 1959, which led to the passing of that Act, suggests otherwise. The only example given in the Spicer Committee Report confirms, if anything, my conclusion. That Report states (at para 309), that additional damages:
"may be particularly useful in the case of the performing right where the event has occurred and the loss is difficult to assess in precise money terms." (emphasis supplied)
219 The words emphasised are a reference to the assessment of the copyright owner's loss as the foundation for an award of compensatory damages.
220 LED submits that according to the view which I have suggested is correct, in a case where there have been multiple infringements, say the production of 100 infringing books, a plaintiff who elects for an account in respect of all of the books cannot be awarded any additional damages, whereas a plaintiff who elects for an account in respect of 99 of the books and damages in respect of the remaining one will, if the circumstances of the case warrant it, be able to recover additional damages in respect of the one book. In the present case, the result is similar, albeit it cannot be said that LED has used an artificial device to achieve it: there are obvious reasons why LED has elected for damages in respect of the plans in accordance with which no houses were built and the plan in accordance with which a loss-making house was built.
221 Does the point made by LED suggest that the construction which I have favoured above leads to an arbitrary or capricious result and that the legislation should therefore be construed otherwise? I think not. The result would be arbitrary or capricious only if the plaintiff, by virtue of the device, were able to obtain the same or substantially the same additional damages in respect of the one infringement as he or she would have been awarded had he or she claimed damages and additional damages in respect of all the infringements. In such circumstances, a plaintiff could benefit by the use of the "device". However, I think it possible and necessary for a court to deal with a claim for additional damages in respect of one infringement putting to one side other infringements in respect of which an account of profits has been claimed. For example, in assessing the flagrancy of an infringement, a court would obviously take a less favourable view of one hundred infringements than a single infringement. If the plaintiff claimed an account of profits in respect of ninety-nine infringements and damages in respect of one, the court would, in effect, treat the plaintiff as having adopted the infringer's conduct as its own in respect of the ninety-nine infringements and disregard them in considering the amount of any additional damages to be awarded in respect of the remaining one. This is not obviously unjust: the copyright owner is taken to know, when electing between an account of profits and damages, that an election of the latter will carry with it, whereas an election of the former will not, the possibility of an award of additional damages.
222 In the present case, I have assessed damages of $20,000 in respect of eight infringements. LED submits that additional damages should also be awarded having regard to the flagrancy of the infringements, the benefit that has accrued to Eagle by reason of the infringements, attempts by Eagle to render itself "judgment proof" and the fact that Eagle's conduct has "hindered the efficient and orderly resolution" of the proceedings. It submits that the flagrancy is established by: the scale of the infringements; the maintenance by Eagle of a cross-claim against LED which was discontinued on the last day of the hearing before Davies J; the fact that Eagle took LED's most successful designs; and the intentional, deliberate and deceitful nature of Eagle's conduct as found by Davies J. In relation to the benefit accruing to Eagle, LED notes that Valeri conceded that there may still be some plans which infringe LED's copyright which have not been disclosed by Eagle.
223 In relation to the "scale of the infringements", it must be remembered that the five plans which I have held did not infringe LED's copyright and the eighty nine infringements in respect of which LED claimed an account of profits are not to be taken into account in the present context. I do not think that the remaining eight infringements, by themselves, establish flagrancy in the sense of a "calculated disregard of the plaintiff's rights, or cynical pursuit of benefit" (Prior v Lansdowne Press Pty Ltd (1975) 29 FLR 59 (VIC/Gowans J) at 65) or "scandalous conduct, deceit and such like [including] deliberate and calculated copyright infringements": Ravenscroft v Herbert & New English Library Ltd [1980] RPC 193 at 208.
224 Davies J's finding in relation to copying was that Mr Cardile did not ask his draftspersons to copy LED's plans; rather, he gave them instructions to change existing Eagle plans in such a way that they were brought into line with Eagle's plans. He also found that the LED plans that were copied were "successful in the market and had won several awards, whilst Eagle's plans were not so successful". As Lockhart J pointed out in International Writing Institute Inc v Rimila Pty Ltd (1994) 30 IPR 250 at 255:
"Plainly, flagrancy is not established by proof of mere knowledge of copying. If it were, then every instance of infringement under s 37 and s 38 [of the 1968 Act] would attract additional damages because knowledge of copying or of infringement is an essential element of any act of secondary infringement under those sections."
225 Eagle's conduct is not, in my view, as obviously deserving of censure as was the infringers' conduct in, for example, Autodesk Australia Pty Ltd v Cheung, above, and Columbia Pictures Industries Inc v Luckins, above, where the infringers knew that what they were doing was an infringement of the applicants' copyright, yet persisted over a considerable period of time. As was noted in Eagle Homes Pty Ltd v Austec Homes Pty Ltd, above, the distinction between taking an architectural idea and copying the expression of that idea is a fine one. In this case I have concluded that the differences between certain of Eagle's customised plans and the nine copyright plans of LED are sufficient to preclude a finding of infringement.
226 On the other hand, Mr Cardile was clearly attempting to gain a commercial advantage by copying LED's most successful designs and the Court should mark its disapproval of that conduct: Bailey v Namol Pty Ltd, above, at 113-114. I therefore think that a modest award of additional damages is warranted. In reaching this conclusion, I place little reliance on Eagle's conduct in relation to this litigation: that is, the attempt to render itself "judgment proof", the abandoned cross-claim and the suggested hindering of LED's attempts to discover all of the infringing plans and the profits made by the construction of houses in accordance with them. Eagle disclosed the fifty seven houses built in accordance with the nine generic infringing Eagle plans. The delay in its disclosure of the further forty five plans arose out of some uncertainty on its part as to whether Davies J's direction required it to disclose plans which departed from the nine generic plans, display homes and customised plans in accordance with which no house was built. I also do not think that, given the thoroughness of the inquiries made by LED and Eagle, it is likely that there are many, if any, further infringements which have not been discovered.
227 In assessing the compensatory damages of $20,000 in respect of the eight plans previously mentioned, I award additional damages of a further $20,000.