Supreme Court of SA|2000-01-24|Before: Mullighan J

LOTT v JBW & FRIENDS P/L & ENDEAVOUR CORP DESIGN No. SCGRG-99-679 [2000] SASC 3 (24 January 2000)

Respondents graphic designers engaged to prepare brochure promoting entertainment event - brochure cover featured a distinctive graphic design illustrating the name of the event - produced with the aid of design software - creative effort and input by designers - graphic subsequently reproduced in newspaper advertisements without designers' permission - held that the graphic is an artistic work in which copyright subsists. Appropriation of substantial part of original work - no basis upon which to imply a licence to reproduce the graphic as a term of the contract between the parties - liability of appellant as director for infringement by company - test to be applied. Damages - measure of damages - compensatory damages limited to amount of appropriate charge for use of copyright material - additional damages for flagrancy of infringement reduced.

Counsel: MR KG NICHOLSON - Solicitors: THOMSON PLAYFORD

Respondent JBW & FRIENDS PTY LTD & ENDEAOUR CORPORATE DESIGN PTY LTD:

Counsel: MR HAL ABBOTT - Solicitors: FLOREANI COATES & CO

Judgment No. [2000] SASC 3

LOTT v JBW & FRIENDS PTY LTD & ENDEAVOUR CORPORATE DESIGN PTY LTD

MULLIGHAN J The appellant was Chairman of Directors of a company called Opera in the Outback Pty Ltd ("the Company"). His son, Gareth Lott, and a business associate, a Mr Robertson, were the other directors of the company. In early 1997 they were in the process of promoting the event known as Opera in the Outback which took place later in the year in October and failed. The company went into administration and a deed of arrangement was entered into resulting in payments to creditors.

In early 1997, arrangements were made with the respondents to prepare two sets of brochures, known as an international brochure and a national brochure. The respondents carried on business together as graphic designers under the firm name of POAGI. I shall refer to the respondents together by that name. A dispute subsequently arose with respect to the national brochure regarding copyright. POAGI prepared this brochure and charged $17,591.96. At an earlier time the international brochure had been prepared by the respondents and paid for by the Company. The fee for the national brochure was not paid and POAGI brought an action against the appellant for recovery of the fee in the Civil Division of the Magistrates Court. Additional amounts were claimed for further work said to have been done by POAGI at the request of the appellant and for damages for infringement of the copyright which POAGI claimed to have in what the learned Magistrate described as the graphic bar in the national brochure which had been allegedly used and published by the appellant without permission in advertisements for the opera in The Advertiser newspaper on about twenty occasions. There is another graphic bar on the front page of the brochure. It appears superimposed over the photograph of the opera singer Dame Kiri Te Kanawa and is comprised of the word "starring" printed in a curved style between two curved lines. It is not clear from the reasons for judgment of the learned Magistrate whether that graphic bar was also the subject of copyright. However, I do not think it as a matter of consequence. Clearly, the learned Magistrate was referring to the graphic bar with the words "Opera in the Outback". If there is an actionable infringement of copyright, damages follow and would not be any greater because of an infringement of copyright in the other and less prominent graphic bar. I shall proceed on the basis that it is only the more substantial graphic bar which is the subject of the judgment of the learned Magistrate.

The proceedings were defended and came to trial by a learned Magistrate. The action for recovery of the fees was dismissed as the learned Magistrate found that the contract with respect to the national brochure was between POAGI and the Company with the consequence that the debt was owed by the Company and not the appellant. That aspect of the proceedings is not the subject of this appeal. However, the learned Magistrate did find that POAGI designed the brochure and owned the copyright in the graphic bar which is comprised of the words "Opera in the Outback" and is the heading on the front page of the brochure. He also found that the appellant had, as a director of the Company, authorised the publication of the graphic bar in the advertisements and was therefore liable for the breach of copyright. He awarded damages. He found flagrancy under s115(4) of the Copyright Act 1968 (Cth) and pursuant to that section awarded damages additional to those for infringement of copyright making a total sum of $8,000. The appellant appeals against that judgment.

The first ground of the appeal is that the learned Magistrate erred in concluding that POAGI owned the copyright in the title printed on the brochure, being the graphic bar.

The Company was the owner and promoter of the opera in the outback venture to be held in the Flinders Ranges on 18th-21st September 1997. Such an event was first held at Beltana in the Flinders Ranges as a Bicentennial Event in 1988. It was proposed that as from 1997 the event be held annually. The name "Opera in the Outback" was registered as a business name and by 1997 it was registered in the name of Gareth Lott. However, that registration lapsed when the Company was incorporated. It may be accepted, for present purposes, that the name is owned by the company and was supplied to POAGI for the purpose of the brochure. It was proposed that the Company would run the event in 1997 and thereafter. The appellant was advertised as the director of the event. POAGI was engaged by an agent of the company to design the brochure. The design included the graphic bar. It is comprised of the words "Opera in the Outback" in an arrangement and style which is the product of design work undertaken by POAGI.

It was the case of POAGI that they designed and crafted the graphic bar using the words supplied by choosing the typefaces and font which they used, the distances between the letters, the angle of the curves above and below the words "in the" and the setting of all of the words in a light colour against a dark colour.

The learned Magistrate found that the graphic bar was original in design and attracted copyright protection.

S32(1) of the Act provides that, subject to the Act, copyright subsists in an original literary, musical or artistic work that is unpublished of which, inter alia, the author was a qualified person at the time when the work was made. POAGI claimed that the graphic bar is an artistic work and there is no issue about the qualification of POAGI as the author. S32(2) provides that when such a work is published, copyright subsists in the work only if the first publication took place in Australia and the author was a qualified person when the work was first published. There is no issue about those matters. The duration of the copyright is 50 years: s33. Ownership of the copyright is in the author (s35) except in circumstances which have no application in the present case.

The appellant contests that the graphic bar is an artistic work for the purposes of s32. "Artistic work" is defined in s10(1) as meaning:

"(a) a painting, sculpture, drawing, engraving or photograph, whether the work is of artistic quality or not;

(b) a building or a model of a building, whether the building or model is of artistic quality or not; or

but does not include a circuit layout within the meaning of the Circuit Layouts Act 1989."

It is contended by the appellant that the graphic bar does not fall within any of the categories in s10(1). It is merely a printed representation of four English words arranged with the aid of a computer and using proprietary software.

For copyright to subsist in the graphic bar, it must be an artistic work. To fall within the definition in s10(1), it must be a drawing or a work of artistic craftsmanship. No other category in s10(1) is applicable. There is no copyright in craftsmanship per se but only works of artistic craftsmanship: Cuisenaire v Reed [1963] VicRp 96; [1963] VR 719. The graphic bar is not an original literary work as the words are not the original work of POAGI. They are not the result of creative effort on the part of POAGI: Exxon Corporation & Ors v Exxon Insurance Consultants International Ltd [1982] 1 Ch 119.

However, the graphic bar is, in my view, a drawing. In Miller & Lange, Limited v Polak [1908] 1 Ch 433, printed words which had been designed in a particular style and used on Christmas cards were held to be drawings for the purpose of the Fine Arts Copyright Act 1862 (UK). In Roland Corporation & Anor v Lorenza & Sons Pty Ltd [1991] FCA 617; (1991) 33 FCR 111, two logos consisting of a single letter each, "R" and "B", designed in a certain way were eligible for copyright protection as they were drawn with care and to obtain an effect: see p114. In that case Pincus J accepted that a work may be so simple that it could not be the subject of copyright and that a mere collection of letters of the alphabet or mere random scribble could not be the subject of copyright. It is submitted by the appellant that the graphic bar should be similarly regarded.

Mr Witt is a director of one of the companies which is a proprietor of POAGI. In his evidence, he briefly described what was involved in the design of the brochure. According to him, there is consultation with the client but nevertheless some design liberties may be taken with a view to targeting a market. Also, there is the final art work which is undertaken by the designer and the "colour visuals" which must be created and incorporated into the design. He said that the graphic bar was part of the graphic element of the design. Mr Bland is employed by POAGI as the creative director and held that position when the brochure was prepared. According to him, the designer could have completed the graphic design virtually instantaneously or it could have been the subject of labour over a couple of days. He rejected the suggestion that the type face used in the graphic bar was readily available in any number of software packages. He explained that there are thousands of type faces available for purchase. However, that used in the graphic bar was "crafted" at the time. Mr Woollard is a creative designer employed by an advertising agency. He was called to give evidence by the appellant. He was asked to assume that the name "Opera in the Outback" was owned by the Company and was provided to him to present in a format on the brochure. The question continued:

"Q ... can you describe from your perspective, the level of originality and labour that would have gone into that.

A I could have been treated very simply. Some thoughts have gone into how it had been laid out to make it interesting, the matter of time involved, by experienced persons, I would think half an hour to an hour's work."

He was also asked about the availability of the type font used in the graphic bar in computer programmes. He said that his firm had several hundred type fonts available for the staff to use. He was shown the graphic bar and said that it is an example of a wood cut ornament which could simply be selected from a computer programme and used in a brochure.

The learned Magistrate did not express any conclusions about those witnesses and what, if any, of their evidence he accepted. He simply found that copyright did subsist. The evidence does not support the contention that there was no artistic effort or input of any substance. The graphic designer had to create a design and make choices about the layout, font, colour and dimensions of each part of the design. Having perused the graphic bar, I do not regard it as so simple as to deny copyright. As was the case in Roland Corporation, the graphic bar was designed and drawn with care to obtain effect. The selection of the font from a computer programme is no less creative than manual drawing and, in any event, there is no reason to reject the evidence of Mr Bland that the graphic bar was crafted at the time. Even if the evidence of Mr Woollard is to be accepted, copyright should not be denied merely because the design was completed in a very short time.

In my view, the graphic bar is artistic work and qualified for copyright. I reject the argument that it is the whole front cover of the brochure which is an original artistic work and the graphic bar taken in isolation is insubstantial and too simple to qualify for copyright. It is, in itself, a graphic design undertaken with care and artistic merit. POAGI was the author of the graphic bar and therefore the owner of the copyright subsisting in it.

As has been mentioned, in May 1997 the advertisements were inserted in The Advertiser newspaper advertising the opera. The graphic bar was used in each advertisement. Later I consider the issue of who placed the advertisements.

According to the appellant, Gareth Lott and Mr Woollard, there is a custom that additional fees for the use of copyright material are not sought for subsequent publication. The learned Magistrate concluded that upon this evidence it was open to infer that such a custom may have developed locally but he found that Mr Witt made it clear to Gareth Lott that copyright was asserted. Consideration of the evidence leads to the conclusion that POAGI objected to the use of the graphic bar in the advertisements. It follows that the learned Magistrate concluded that if any such custom did exist, it had been negated by the arrangements between the parties and the Company.

The learned Magistrate went on to find that the appellant infringed the copyright by the publication of the graphic bar in the advertisements. That finding is challenged on this appeal.

I first address the question of whether the copyright was infringed. S36(1) of the Act provides:

"36(1)Subject to this Act, the copyright in a literary, dramatic, musical or artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright."

"14(1)(a) a reference to the doing of an act in relation to a work or other subject-matter shall be read as including a reference to the doing of that act in relation to a substantial part of the work or other subject-matter".

It is submitted on behalf of the appellant that the effect of those provisions is that a "substantial part" of the copyright work must be reproduced before there will be copyright infringement. If the graphic bar was reproduced, in the advertisements, that did not amount to the reproduction of a substantial part of the work, it being the appellant's contention that it is the whole brochure which is the subject of copyright: see MJA Scientifics International Pty Ltd & Anor v SC Johnson & Son Pty Ltd [1998] FCA 1467; (1998) 43 IPR 287. I have rejected that contention. As I have said, POAGI had copyright in the graphic bar and the question of infringement involves consideration of whether the graphic bar was reproduced, not necessarily the whole brochure.

The next question is whether the graphic bar was reproduced in the advertisements. There are dissimilarities between the graphic bar, the subject of copyright, and the graphic bar published in the advertisements. In some, but not all of the advertisements, the first letter of the first and last words is longer than in others, where all of the letters are the same size. There are others dissimilarities. The learned Magistrate found that the "alterations are marginal; the essentials of the original have been preserved". In Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, Lord Pearce said at p293:

"Did the defendants reproduce a substantial part of it? Whether a part is substantial must be decided by its quality rather than its quantity. The reproduction of a part which by itself has no originality will not normally be a substantial part of the copyright and therefore will not be protected. For that which would not attract copyright except by reason of its collocation will, when robbed of that collocation, not be a substantial part of the copyright and therefore the courts will not hold its reproduction to be an infringement. It is this, I think, which is meant by one or two judicial observations that 'there is no copyright' in some unoriginal part of a whole that is copyright."

Whilst that case involved consideration of whether copyright subsisted, the observations of Lord Pearce assists in considering the question of infringement. In SW Hart & Co Proprietary Limited v Edwards Hot Water Systems [1985] HCA 59; (1984-1985) 159 CLR 466, Gibbs CJ said, at p474:

"The question is not whether there are dissimilarities but whether the respondent's products closely resembled the appellant's drawings or a substantial part of them."

Wilson J, at p482, accepted that reproduction does not require a complete and accurate correspondence to a substantial part of the work and went on to say:

"In my opinion, the question whether there has been a reproduction is a question of fact and degree depending on the circumstances of each case. The emphasis upon quality rather than quantity directs attention to the significance of what is taken."

See also Dixon Investments Pty Ltd & Another v Hall (1990) 18 IPR 490 at pp494-496.

In this case, the reproduction was of all of the words and in almost the identical graphic design of the original. The variations, such as they exist, are minor. Without question, the substantial part was reproduced.

It was further argued that the words "Opera in the Outback" can be produced in an infinite number of ways. Any number of designs and fonts can be used. As the Company owns the compilation of words, they can be used by the Company in any way it chooses. I reject that argument. The evidence clearly established that POAGI designed the graphic bar in the manner previously mentioned. It is the publication of that graphic bar which constitutes the infringement, not simply publication of the words.

The appellant contends that the Company, which he asserts published the advertisements, have an implied licence to reproduce the graphic bar. Such a licence, it is claimed, may be implied as a term of the contract, by conduct or by trade or custom: see Halsbury's Laws of Australia Vol 15 para 240-2250 and para 240-2260. Having accepted that POAGI have copyright in the graphic bar, it bears the onus to show that the Company, or whoever caused the advertisements to be published, did not have such a licence: see Avel Proprietary Limited v Multicoin Amusements Propriety Limited & Anor [1990] HCA 58; (1990) 171 CLR 88.

It is submitted by the appellant that a licence should be implied for the following reasons. I consider them separately as well as their combined probative force. The first matter is that given the opera venture and the purpose of the brochure, subsequent advertising ought to have been contemplated by POAGI. In some respects, this is the strongest point made by the appellant. It was known that the opera venture was to occur in the future and it may be expected that there would be printed publicity apart from the brochures. However, the contracts entered into by the parties do not refer to any use of the copyright graphic bar in any other manner which might be expected if further use was contemplated.

The next matter is that charges had been made to the work undertaken by POAGI which, I expect, is said to suggest that no further charges would be made even if the graphic bar was reproduced. I do not think this matter assists one way or the other in the resolution of the issue. There is no reason to suggest that merely because charges had been made, there would be no further charges for further use of the graphic bar. The appellant placed reliance upon his evidence and the evidence of others as to whether copyright had been claimed in the past.

The appellant gave evidence to the effect that in his experience of over 2,500 events, he had not previously encountered this issue of infringement. Gareth Lott gave much the same evidence with respect to his twelve years of experience. The appellant's evidence was that he had promoted or been involved in 2,500 events but he did not say how many of those events involved specially-designed brochures attracting copyright and subsequent reproduction. Nonetheless he said that such reproduction was common practice in the entertainment industry. Mr Woollard's evidence is that in his experience of some 25 years, copyright in these circumstances is vested in the client but, if necessary, a simple express assignment is made for $1.00. A little later in his evidence, he said the fee was $20. He said that he would not charge again if a brochure prepared by him was reproduced. Also, he said that he would not claim copyright.

I do not think Mr Woollard's evidence assists. It seems that he was saying that he would not claim copyright in circumstances such as the present and if it did exist he would assign it to the client for a nominal fee. So, it appears that in this part of his evidence he is not addressing the present issue. In the rest of his evidence on this topic, Mr Woollard addresses his attitude to reproduction of his work. He said he would not be concerned and it happens every day. He also said that he would not charge twice. He had never encountered the issue with his own clients.

The learned Magistrate did not deal with the issue of a licence as an implied term of the contract, by conduct or by trade practice or custom. He did not make specific findings about these witnesses or their evidence, although he did make some adverse findings about the appellant. He said that his:

"Assessment of Mr Lott's evidence was that it contained much self-serving material and that his answers were at times evasive or at least not responsive. His answers about the difference between a company and a business, in view of his vast experience, were unconvincing."

Specific findings should have been made about the witness and what evidence the learned Magistrate found to be acceptable.

The learned Magistrate did not consider the significance, if any, of the issue about copyright arising after the Company was in default of payment of the fee. However, he was not prepared to find that there was an implied licence, which he appears to have described as a custom. He said that if it did exist, it was relevant to damages, which is incorrect. If it existed, neither the Company nor the appellant was liable for the infringement.

Because the learned Magistrate declined to find that there was a custom as alleged by the appellant, indicates that he rejected the evidence of the appellant and the witnesses on this matter. He saw them in the witness box over a considerable period of time and, no doubt, evaluated their evidence in the context of all of the evidence in the case, including evidence of Mr Witt as to his practice which suggests to the contrary. This evidence is mentioned shortly. There is no sound basis to reach a different conclusion from that of the learned Magistrate and find that such a custom existed.

The next matter upon which the appellant relies is that there was no complaint by POAGI about infringement of copyright of the graphic bar, as opposed to the whole brochure, until after May 1997 when many advertisements had been published. It is said that given the POAGI's interest in the industry, it must have been aware of the advertisements. In fact, a complaint about infringement of copyright was made in a letter from Mr Witt to Gareth Lott on 28th May 1997 in the course of responding to complaints made by him and the making of complaints by POAGI. The evidence discloses that the complaint was again made by Mr Witt during a telephone conversation with Gareth Lott on 29th May 1997. By that time, one advertisement using the graphic bar had been published in The Advertiser on 3rd May 1997 and another on 10th May 1997. The next advertisement was not published until 14th June 1997 and the others were published thereafter. I do not think the failure to complain immediately after the publication of the first two advertisements assists in the resolution of the issue. As far as I can see, Mr Witt was not asked for an explanation. There may be a number of reasons why the complaint was not made earlier. It is not appropriate to speculate. I do not think the timing of the first complaint suggests that there was an implied licence to use the graphic bar.

The documents brought into evidence by POAGI at the time of the formation of the contract and as the work was undertaken indicate that the contract was for the preparation of the brochure. They do not afford any reason to imply a licence. I agree with the submission of Mr Abbott, for the respondent, that the cases about alleged infringement of copyright architect's plans for buildings are of no assistance: see Stovin-Bradford v Volpoint Properties Ltd [1971] 3 All ER 570 and Gruzman v Percy Marks Pty Ltd & Anor (1989) 16 IPR 87. Clearly in those cases, there must be an implied licence to the building owner to use the plans for the purpose for which they are prepared. In the present case the evidence establishes that the only purpose of the artistic work was to advertise the opera by means of the brochure.

Mr Witt gave evidence that he was aware of copyright and it was his practice to charge customers for different uses of the same work. I do not think the learned Magistrate made adverse findings about Mr Witt on his evidence generally. In the context of his evidence that POAGI was dealing with the appellant and not the company, the learned Magistrate said that he had "misgivings about the thrust of Mr Witt's testimony". In the circumstances, I do not think he should be regarded as discredited and there is no reason not to accept his evidence on the topic of an implied licence.

In my view, upon consideration of the evidence, it has been established that there is no basis to imply a licence to reproduce the graphic bar as a term of the contract. The evidence of the appellant and Gareth Lott should not be regarded as sufficiently convincing to rebut the contention of POAGI that there is no such licence by conduct, trade practice or custom. I am not satisfied that Mr Woollard was addressing the relevant issue. If his evidence is to be accepted, it seems that he was speaking mainly as to his own practice and experience. The documents and the evidence of Mr Witt establishes that the contract was for the limited purpose of the brochure and there is no basis to imply a licence. Given Mr Witt's evidence and the nature of the arrangement between the parties, the onus upon POAGI to establish that no such licence should be implied was discharged.

On the question of liability, it remains to consider who infringed the copyright. The learned Magistrate made the following findings:

"Mr Lott was one of three directors of OITO. He was made aware that POAGI threatened proceedings over the copyright issue. He was also party to discussion with Gareth Lott as to whether the advertisements should proceed regardless. According to Bob Lott's own testimony, he had the final say on all matters. Anyone authorising the infringing act can be held liable. Has Bob Lott, as director, expressly or impliedly procured or directed the infringing act? Prima facie, a managing director is not liable for the tortious acts of the company unless he himself is privy to those acts, that is, unless he ordered or procured the acts. The directors of this company did not proceed at arms length. It is a company where it is plain that the directors are executive directors making decisions on all matters. I conclude that Mr Bob Lott had direct knowledge of the infringement and authorised same. Whether he speculated that this could not be held to be a breach and proceeded on that assumption is no defence. I find therefore that the plaintiff has made out its case of infringement of copyright against Mr Bob Lott."

The appellant appeals against those findings. The evidence of Gareth Lott was that the advertisements were prepared by him and under his supervision. As has been mentioned, he is a director of the Company. He said the advertisements were lodged by him with The Advertiser. The effect of his evidence is that all of his work in this regard was undertaken on behalf of the Company and in his capacity as a director and employee of the Company. An application form for a credit account with The Advertiser was sent by the newspaper to the Company. He said he took responsibility for the advertisements and that the Company paid for the advertisements. There is no direct evidence that the appellant played any part in the preparation and publication of the advertisements. It is his case that he did not infringe the copyright and the action against him should have been dismissed.

On the basis of the evidence which has been mentioned, it must be accepted that the Company placed the advertisements and paid for them. There is no criticism of the evidence of Gareth Lott by the learned Magistrate about the role which he played in that regard as an officer of the Company. The question of liability of the appellant falls to be decided upon the basis upon which a company director may be liable for the conduct of this nature of a company. In Microsoft Corporation & Anor v Auschina Polaris Pty Ltd & Ors [1996] FCA 1069; (1996) 36 IPR 225, Lindgren J carefully reviewed the lines of authority on this question. He began his analysis of the law as follows at p235:

"It is useful to state at the outset certain propositions which seem to be uncontroversial:

(1) Infringement of copyright is treated as tortious: cf WEA at FCR 283.

(2) Where copyright is infringed by a corporation, the question of the nature and extent of involvement on the part of a director necessary for him or her to be personally liable in respect of the infringement is not answered by principles dealing with joint tortfeasors, or by the notion of 'authorisation' as it is used in copyright statutes: WEA at FCR 283.

(3) The principles governing vicarious liability of an employer for the torts of its employee do not govern the present question: WEA at FCR 283.

(4) The holding of an office in a company, such as that of director or even managing director, does not itself suffice to render the office-holder liable.

(5) It is not necessary that the director know that the conduct in question is tortious.

(6) In any particular case it is necessary to assess closely the director's conduct and its relationship with the tortious conduct for which the company is liable."

The reference to WEA is to WEA International Inc v Hanimex Corp Ltd [1987] FCA 379; (1987) 17 FCR 274. Lindgren J reviewed the relevant lines of authority and identified from the cases two approaches to the basis for attributing liability to a director for the tortious acts of a company. They may be summarised as "making the tortious act his own" test and the "procured or directed test" although he acknowledged that these labels are the words used by judges and not the words of a statute and that particular sets of circumstances may satisfy both tests: see pp236-239. Lindgren J preferred the "procured or directed test". I respectfully adopt his analysis and conclusion although in the present case the circumstances justify the application of either test for the following reasons.

The appellant's evidence, standing alone, leads to the conclusion that the venture was very much his own. It was his idea encouraged by the Major Events Committee. He formed the Company for this specific purpose. A Mr Robertson owned 45% of the shares and was responsible for finance. The appellant and Gareth Lott owned the remainder of the shares. As has been mentioned, the appellant was the Chairman of Directors of the Company. He was the director of the event. He said in evidence that "anything to do with the way in which the event appeared or that happened at the event" had to have his approval. His evidence establishes that he was involved in every matter of significance with regard to the planning, organisation and promotion of the event. He said that the advertisements placed with The Advertiser were paid partly by a contra arrangement as it was a sponsor and partly in cash. He was aware of POAGI's claim of copyright and he decided to proceed with the advertisements regardless. That decision was taken by him, not Gareth Lott.

In my view, the evidence establishes that the appellant did infringe the copyright.

The learned Magistrate acknowledged that there was difficulty in assessing damages.

The power to award damages is to be found in s115(2) of the Act. I adopt the following observations of Sundberg J in MJA Scientifics International Pty Ltd & Anor v SC Johnson & Son Pty Ltd [1998] FCA 1467; (1998) 43 IPR 287 at p319:

"Damages under s115(2) of the Act are damages for the wrong done to the owner's copyright as an incorporeal right. The measure of damages is the depreciation caused by the infringement to the value of the copyright as a chose in action: Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd [1936] Ch 323 at 336. There is, however, no fixed method of assessment that applies to all cases. The purpose of such damages is to compensate the copyright owner for the loss he has suffered as a result of the breach: Interfirm Comparisons (Aust) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445. Damages are at large, and may be assessed according to the circumstances of the case. In some instances the measure adopted has been the fee which the copyright owner might fairly have charged for the use of his work by the respondent. In others, particularly where the work has been published, the measure has been the loss of sales suffered by the owner: see Ricketson, The Law of Intellectual Property, 1984, pp295-6 and Interfirm Comparison at 447."

It was submitted by the appellant that, as no actual damage was proved by POAGI, only nominal damages could be awarded. That was the approach taken by Sundberg J in another MJA judgment: see 43 IPR 281. However, as he observed in the passage quoted, that is not the only measure of damages.

In the present case, Woollard said that the charge for use of the copyright material would be modest. He would not make a charge, but, as has been mentioned, if he did it would be a token charge of $1. Later in his evidence, he said that a fee to assign the subject copyright, if to be charged, would be $20 and, later again in his evidence, he said the charge would be $1 or $10. In his evidence Witt said that an appropriate charge would have been $250.

As has been mentioned, the learned Magistrate found the infringement to be flagrant. In my view, he was correct in that decision. The infringements were frequent and committed by the appellant in the knowledge that copyright was claimed. They were deliberate and repetitive: see Ravenscroft v Herbert and New English Library Limited [1980] RPC 193 at p208. In Prior v Lansdowne Press Pty Ltd [1977] VicRp 6; [1977] VR 65, after referring to s115(4)(b) of the Act, Gowans J (at p69) said that the facts upon which the court can be satisfied of flagrancy are for the plaintiff to establish and there "must be something more than is sufficient to justify a possible view of the defendants' conduct, it must be sufficient to establish a persuasive conclusion".

The appellant contended that flagrancy was not established as the issue of copyright was only raised by the plaintiff after disagreement about other matters and the two advertisements in The Advertiser had been published. Also, it is contended that it was the evidence of the appellant and Gareth Lott that the claim of copyright was not sustainable and that the advertisements could have been altered without adverse impact so as to avoid infringement of the copyright. These matters are no answer to the allegation of flagrancy. Copyright was infringed after it had been claimed and it has been established that the claim was justified. As has been mentioned, the graphic bar was published widely and to promote the event to the advantage of the appellant.

On 28th May 1997, POAGI sent an invoice to the Company for $10,000 for the copyright fee. The learned Magistrate found that amount to be a "good starting point" for the assessment of damages. He said that he appreciated that this charge was for the copyright of the whole project but that the appellant was put on notice that this amount may be claimed. He went on to say that using a broad brush and making an allowance for flagrancy, he awarded $8,000.

In my view, the learned Magistrate erred in his approach to the assessment of damages. Compensatory damages could not have exceeded $250 in view of the evidence of Witt. Additional damages for flagrancy of the breach were justified but not to the extent of many thousands of dollars. It follows that the assessment of damages must be considered afresh.

I have already made observations about Mr Witt. I do not think there is any reason to reject his evidence that if a fee had been charged, it would have been $250. If he was untruthful in this aspect of his evidence, it might be expected that he would have selected a fee which was not so modest. I can see no reason to reject his evidence and the amount of $250 is appropriate for compensatory damages. As has been mentioned, additional damages for flagrancy of the breach are justified. Given the number of occasions of infringement of copyright and the extent of circulation of the advertisements, the award of damages should be a total sum of $1,000 which includes damages for flagrancy as well as compensatory damages.

I confirm the conclusion of the learned Magistrate as to liability but I allow the appeal with respect to damages. I set aside the award of damages and substitute an award of $1,000.

LOTT v JBW & FRIENDS P/L & ENDEAVOUR CORP DESIGN No. SCGRG-99-679 [2000] SASC 3

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Judgment (86 paragraphs)

LOTT v JBW & FRIENDS P/L & ENDEAVOUR CORP DESIGN No. SCGRG-99-679 [2000] SASC 3 (24 January 2000)

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Legislation Cited (2)

Cases Cited (8)