Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd

Federal Court of Australia (Full Court)|2008-04-01|Before: Lahore J, Kenny JJ

INTRODUCTION 1 The corporate parties to this appeal are competitors in the Victorian project homes market. The appeal, which is brought pursuant to leave granted by this Full Court, is from an interlocutory judgment of the Court. On 17 March 2008, for reasons published by his Honour on 28 September 2007 (now published at 74 IPR 52), the learned primary judge (a) made declarations concerning the infringement by the appellants of the second respondent's copyright in the Seattle 31 house plan and the first respondent's copyright in a house built in accordance with that house plan; and (b) granted injunctive relief intended to restrain future infringements by the appellants of the respondents' respective copyrights. The issue of the financial relief, if any, to which the respondents are entitled remains to be determined by the primary judge. 2 For the reasons set out below we have concluded that the appeal should be dismissed.

The appellants 3 Metricon Homes Pty Limited ("Metricon") designs, builds and sells residential project homes in Victoria. Mr Palazzesi is the Managing Director of Metricon. Mr Popple is Metricon's Product Development Manager. Metricon and Messrs Palazzesi and Popple are together hereafter referred to as the Metricon Parties. Between early 2003 and early 2005 Metricon constructed houses with the names Prada, Tyrell, Connolly, Coburn and Streeton (together referred to as the Metricon Houses). 4 In these reasons for judgment we have for simplicity deleted from the names of the various plans and houses the numbers which indicate the approximate size of the completed houses.

The respondents 5 Barrett Property Group Pty Ltd ("Barrett"), which trades under the name "Porter Davis Homes", also designs, builds and sells residential project homes in Victoria. Barrett owns the copyright in houses known as the Seattle and the Memphis. The Memphis is an adaptation of the Seattle. SRS Property Holdings Pty Ltd is the owner of copyright in the plans of the Seattle and the Memphis. Like the primary judge, we will refer to these houses and their plans together as the Copyright Works. We will refer to the respondents together as the Barrett Parties and to the Seattle and the Memphis together as the Barrett Houses.

THE CLAIMS 6 The Barrett Parties relevantly claimed at first instance that Metricon had infringed SRS Property Holdings' copyright in the plans of the Barrett Houses by reproducing a substantial part of such plans without the licence or approval of SRS Property Holdings. The reproductions relied upon were the making of the plans for the Metricon Houses and the construction of the Metricon Houses. The Barrett Parties additionally claimed that Metricon had infringed Barrett's and/or SRS Property Holdings' copyright in the Barrett Houses by reproducing a substantive part of the Barrett Houses without the licence or approval of the owner of the copyright. The reproductions relied upon were the construction of the Metricon Houses. 7 The case against Messrs Palazzesi and Popple respectively was that each had infringed the Barrett Parties' copyright in the Copyright Works by authorising the infringing conduct of Metricon.

CONCLUSIONS OF THE PRIMARY JUDGE 8 Aspects of the reasons for judgment of the primary judge are considered in more detail below in the context of our consideration of the issues raised by the appeal. Nonetheless it is convenient to summarise his Honour's reasons for judgment here. 9 The primary judge was not required to determine whether copyright subsists in the Copyright Works. The subsistence of copyright in the Copyright Works was ultimately conceded by the Metricon Parties. Nor was his Honour required to determine whether Metricon had reproduced the whole of either or both of the Copyright Works. The Barrett Parties did not seriously press their pleaded case that the whole of the Copyright Works had been reproduced by Metricon. 10 The principal issue for his Honour's determination was thus, in respect of each of the Copyright Works, whether Metricon had reproduced a substantial part of that work within the meaning of s 14(1) of the Copyright Act 1968 (Cth) ("the Act"). The case before his Honour was conducted on the basis that this issue was to be determined, at least initially, by reference to the plan for the Seattle and a constructed Seattle house, on the one hand, and the plan for the Prada and a constructed Prada house, on the other hand. As discussed below, the plan for the Prada was taken from a drawing known as Prototype 20B which was itself a modification of a drawing known as Prototype 20A. 11 Although all of the plans in suit are annexed to the reasons for judgment of the primary judge, for convenience, we have annexed to these reasons for judgment the critical plans, namely the Seattle plan, the Prada plan (otherwise known as Prototype 21A) and the Prototypes 20A and 20B drawings. 12 As indicated above, his Honour concluded that, by drawing the plan for the Prada and by constructing the Prada house, Metricon had reproduced a substantial part of the plan for the Seattle and the Seattle house. The substantial part identified by the primary judge was the portion of the plan and house which his Honour called the "alfresco quadrant". We will use the same expression to describe, where applicable, that portion of the respective houses and plans that his Honour described as the "hub of the home"; that is, the kitchen/meals area, the family living area, the alfresco (ie a covered outdoor area) and the rumpus room. In the Seattle plan and the Seattle House and the Prada plan and the Prada house the entire alfresco quadrant is under a single "hip" roof-line. 13 After reaching his conclusion concerning the Prada plan and the Prada house, the primary judge turned to consider the remaining Metricon Houses and their plans. His Honour found that there was a striking similarity between their respective alfresco quadrants and the Seattle alfresco quadrant, both at the plan level and so far as the constructed houses were concerned. He accepted the expert evidence of Dr John Cooke to the effect that: (a) the alfresco quadrant in each of the Tyrell, the Connolly and the Streeton plans and houses were, subject to minor modification, essentially the same as the Seattle plans and house; and (b) the rear sections in the Coburn plan and house were derived by reference to the Seattle plan and are modified copies of the Memphis plan and house. 14 His Honour concluded that the remaining Metricon houses and their respective plans infringed copyright in the Copyright Works. 15 Finally, the primary judge concluded that each of Messrs Palazzesi and Popple had authorised the infringing conduct of Metricon.

SECTION 14(1) OF THE COPYRIGHT ACT 16 The principal issues to be determined on this appeal concern his Honour's application of s 14(1) of the Act to the primary facts as conceded before, or found by, his Honour. Section 14(1) provides as follows: (1) In this Act, unless the contrary intention appears: (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; and (b) a reference to a reproduction, adaptation or copy of a work shall be read as including a reference to a reproduction, adaptation or copy of a substantial part of the work, as the case may be.

17 This appeal is brought under s 24 of the Federal Court of Australia Act 1976 (Cth). It is an appeal by way of rehearing on the evidence adduced before the primary judge (Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507).

18 A number of Full Court authorities has considered the proper role of an appellate court where the appeal is by way of rehearing (see, for example S & I Publishing Pty Ltd v Australia Surf Life Saver Pty Ltd (1998) 88 FCR 354; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 and Poulet Frais Pty Ltd v the Silver Fox Company Pty Ltd (2005) 220 ALR 211).

19 In Branir at [22] Allsop J, with whom Drummond and Mansfield JJ agreed, after extensive consideration of authorities touching generally on the role of appellate courts, concluded that the task of a court on an appeal by way of rehearing is the correction of error. At [24]-[25] his Honour observed:

What is error in any given case depends, of course, not only on the evidence, but also on the nature of the findings or conclusions made by the primary judge. The demonstration of error may not be straight-forward where findings or conclusions involve elements of fact, degree, opinion or judgment or when the findings or conclusions in question can be seen as made with the advantage of hearing the evidence in its entirety, presented as it unfolded at the hearing with the opportunity over the course of the hearing and adjournments for reflection and mature contemporaneous consideration and assessment, in particular in a long and complex hearing …. This is not to elevate ordinary factual findings to the protected position of those based on credit, but it is to make clear, first, the advantages of the trial judge and, secondly, the need for demonstration of error. The inability to identify error may arise in part from the unwillingness of the appeal court to be persuaded that it is in as good a position as the trial judge to deal with the issues, because of the kinds of considerations referred to in [24] above. Or, it may be that the nature of the issue is one such that (though not a discretion) there cannot be said to be truly one correct answer. In such cases the availability of a different view, indeed even perhaps the preference of the appeal court for a different view, may not be alone sufficient …. In circumstances where, by the nature of the fact or conclusion, only one view is (at least legally) possible (for example, the proper construction of a statute or a clause in a document, where, although, as often said, minds might differ about such matters of construction, there can be but one correct meaning … the preference of the appeal court for one view would carry with it the conclusion of error. However, other findings and conclusions may be far more easily open to legitimate differences of opinion eg valuation questions …. (Citations omitted) 20 The applicability of the observations of Allsop J in Branir to appeals of the present kind is confirmed by reference to the earlier Full Court decision in Eagle Homes Pty Ltd v Austec Homes Pty Ltd (1999) 87 FCR 415 and, in particular, the observations made by Weinberg J at [113]-[125]. At [114] Weinberg J, citing Biogen Inc v Medeva plc [1997] RPC 1 at 45, described the question of whether or not a particular drawing is sufficiently similar to another to amount to a reproduction of it, or a reproduction of a substantial part of it, as "a kind of jury question" so that a finding on the question "should be treated with appropriate respect by an appellate court". At [119] his Honour characterised the questions of whether or not a particular drawing reproduces another drawing, or a substantial part of another drawing, as questions involving matters of impression and degree with the consequence that an appeal court would not depart from the finding of a primary judge without being persuaded that it was erroneous in principle, or plainly and obviously wrong (see also per Lindgren J, with whom Finkelstein J agreed, at [108]).

DID THE PRIMARY JUDGE ASK HIMSELF THE RIGHT questionS? 21 As mentioned above, the primary judge initially considered whether the Prada plan and the constructed Prada house reproduced a substantial part of the plan for the Seattle and the Seattle house within the meaning of s 14(1) of the Act. 22 On appeal the Metricon Parties did not challenge the findings of the primary judge that the plan for the Prada was in part a copy of the plan for the Seattle. Their challenge was directed to his Honour's conclusion that what was copied was a substantial part of the plan for the Seattle. The Metricon Parties contended that his Honour made fundamental errors of principle by failing to ask himself the questions actually posed by s 14(1) of the Act. 23 The correct approach, as the Metricon Parties uncontentiously claimed, was for his Honour: (a) to identify the work in suit in which copyright subsists; (b) to identify in the alleged infringing work the part taken (ie derived or copied) from the work in suit; and (c) to determine whether the part taken constitutes a substantial part of the work in suit. 24 It was at steps (b) and (c) that the Metricon Parties contended that the primary judge erred, and in particular, in the identification in the alleged infringing work of the part taken. They submitted that his Honour did not identify in the Prada plan what had been copied from the Seattle plan and the Seattle house. Had his Honour undertaken this exercise, the Metricon Parties submitted, he would have concluded that only a trivial part of the Seattle design had been taken.

Did his Honour identify what was copied? 25 The contention that the primary judge failed to identify in the Prada plan what had been copied from the Seattle plan and the Seattle house requires consideration to be given to the process whereby the Prada plan came into existence. His Honour's findings concerning this process are not challenged. They include that the drawing work on the concept for the Prada design began on 22 February 2002 and was concluded by 27 February 2002. The evidence indicates that at least thirteen preliminary drawings pre‑dated a sketch known as Prototype 20A produced on 26 February 2002. The evidence also indicates that the final design concept for the Prada was achieved only one day later when a sketch known as Prototype 20B was produced. There is no material difference between Prototype 20B and the Prada plan. The evidence does not disclose any intermediate drawings between Prototype 20A and Prototype 20B. 26 Prototype 20A is not claimed to involve copying from the Seattle plan. Indeed, the primary judge found that Prototype 20A was substantially a copy of another design, namely, the Pavilion design. The Pavilion design was not a work in suit. The Metricon Parties contend that, as it is accepted that Prototype 20B has its origins in Prototype 20A, the part of Prototype 20B taken from the Seattle plan is to be identified by comparing Prototype 20A and Prototype 20B. They submitted that when this exercise is undertaken it can be seen that the amendments "amount to four or five lines and the judgment…of bringing the alfresco in under the roof [and] having a rumpus room at the back". 27 In considering the merit of the above submissions it is necessary to turn to the findings of fact made by the primary judge. Those findings of fact are to be understood against the background that his Honour rejected the evidence given by the witnesses called by the Metricon Parties concerning the history of the Prada design. Indeed, his Honour formed the view that on the issues of derivation and copying, the four key witnesses called by the Metricon Parties made a concerted effort to present a false defence (see Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2) [2007] FCA 1823 at [13] and [16]). 28 His Honour was thus left with no acceptable explanation advanced by any person concerned with the creation of Prototype 20B as to the derivation of its alfresco quadrant. Importantly, no lay or expert witness gave evidence that the design process that resulted in the creation of Prototype 20B from Prototype 20A "amount[s] to four or five lines, and the judgment…of bringing the alfresco in under the roof [and] having a rumpus room at the back" (see [26] above). 29 The primary judge found that there were probably discussions between those principally concerned with the design of the two prototype drawings to the effect that a more cost effective design of the back half of Prototype 20A was desirable and that it could be achieved by using the design of the back half of the Seattle. His Honour noted the striking similarities between the back half of the Seattle and that of Prototype 20B and concluded that the alfresco quadrant of Prototype 20B was deliberately copied from the Seattle design by reference to the Seattle plan and the Seattle display home.

Did his Honour find modifications rather than copying? 30 Significantly, his Honour did not conclude that the alfresco quadrant of Prototype 20B was created by a modification of Prototype 20A that involved the retention of significant aspects of Prototype 20A. We are satisfied that a fair reading of his Honour's reasons for judgment discloses that his Honour concluded that the alfresco quadrant of Prototype 20B, as a quadrant, was created by copying. Although his Honour referred, for example, at [212] to "the modification of 20A to become 20B" and at [213] to "alterations" being made to Prototype 20A leading to Prototype 20B, we conclude that the modifications and alterations referred to involved the copying of the alfresco quadrant of the Seattle design. That is, having concluded that Prototype 20A was substantially a copy of the Pavilion design, his Honour concluded that Prototype 20B was, as to its front section, substantially a copy of the front of the Pavilion design and, as to its alfresco quadrant, a copy of the alfresco quadrant of the Seattle design. 31 For the above reason we reject the Metricon Parties' submission that his Honour found that Prototype 20B was merely a modification or amendment of Prototype 20A. Support for his Honour's conclusion that the entire alfresco quadrant was copied may, as a matter of logic, be found in the fact that the apparent problems affecting Prototype 20A were solved in a single day and with no intermediate drawings between Prototype 20A and Prototype 20B. Additionally it can be seen that Prototype 20B shares a number of features of little inherent significance with the Seattle plan and additionally identifies the intended use of rooms and spaces in a closely comparable way to the Seattle design. This latter feature involves a significant change in design concept from Prototype 20A. The fact that the dimensions of Prototype 20B and the Seattle Plan are different and that details of the kitchen and the positions of certain doors and windows varies between the two drawings did not compel a conclusion that the alfresco quadrant of Prototype 20B was not copied from the Seattle design. 32 We therefore conclude that the primary judge did identify in the alleged infringing works (ie the Prada plan and the Prada house) the part that had been taken or copied from the work in suit (ie the Seattle plan and the Seattle house). That part was the alfresco quadrant of the Prada plan and the Prada house.

Was the appropriate finding modification only? 33 The Metricon parties alternatively contended that, if the primary judge did not find that Prototype 20B/Prada was made solely by modifying Prototype 20A with reference to the Seattle to include a rumpus room with consequential adjustments and a rectangular alfresco under the roofline and a trivial alteration to the kitchen bench, he should have done so. A significant difficulty in the way of accepting this contention is that it finds no support in either the evidence of those responsible for Prototype 20B or in the expert opinion evidence. It does not reflect the case run by the Metricon Parties at trial. As noted above, that case was almost entirely rejected by the primary judge. 34 His Honour was satisfied that there were striking similarities between the Seattle and the Prada plans and, in particular, that their respective alfresco quadrants were "almost identical". His Honour found that the Metricon Parties had access to the Seattle design, both in plan and house form, prior to the creation of Prototype 20B. He rejected as being contrary to the evidence the contention that there was very little, if any, room for choice as to where the alfresco and surrounding rooms could be placed in the Prada design. Indeed, his Honour found that there are a number of ways of incorporating an alfresco in combination with a kitchen, living, driving and rumpus areas and that the alfresco quadrant of the Seattle design was far from obvious. 35 His Honour noted that there were marked similarities in the features of the respective alfresco quadrants, including incidental features which were not needed for functional purposes. He also noted a change between Prototypes 20A and 20B in the design of the kitchen which resulted in the kitchen of Prototype 20B constituting a "colourable change" to the Seattle kitchen. 36 The Metricon Parties have not demonstrated that error affects the conclusion drawn by the primary judge from the above factors, namely that Metricon consciously copied the alfresco quadrant of the Seattle design to produce Prototype 20B and in turn the Prada design. Moreover his Honour's conclusion was supported by the expert opinion of Dr Cooke that the alfresco area, and the relationship between it and the adjacent areas, and the arrangement of bedrooms and wet areas behind the kitchen and family areas in the Prada plan (ie the back half of the Prada), was "an enlarged…copy of the corresponding part of the Seattle plan, with minor modifications of detail". 37 We reject the contention that his Honour erred in not finding that the Prada was made solely by modifying Prototype 20A in the way suggested by the Metricon Parties.

Did his Honour ask the wrong question re substantial part? 38 The Metricon Parties further contended that the primary judge asked himself the wrong question in concluding that the part taken from the Copyright Works was a substantial part of the Copyright Works. There was significant overlap between this contention and the earlier contention, which we have rejected, that his Honour did not properly identify the part that had been taken from the Seattle design. This is illustrated by the following passage from the written submissions of the Metricon Parties: When a comparison is made between Metricon's plan as it was before the relevant act of copying and the plan post-copying, it is apparent that all that could have been copied is, literally, a few lines drawn at right angles - and the bare idea of a rectangular alfresco under the roof line. This is not the reproduction of a substantial part of the Seattle. (footnotes omitted) 39 As indicated above, the primary judge did not conclude, and in the absence of supporting evidence could only with difficulty have concluded, that all that was copied was a few lines drawn at right angles and the bare idea of a rectangular alfresco under the roof-line (see [28]-[29] above). His Honour concluded that the alfresco quadrant of Prototype 20B was copied from the Seattle design. Indeed, there seems to us to be an inconsistency between the disavowal by the Metricon Parties of any challenge to his Honour's finding of copying and their above submission. The above submission necessarily constitutes a challenge to his Honour's finding that the alfresco quadrant was copied from the Seattle design. The drawing of a few lines at right angles and the adoption of a bare idea of a rectangular alfresco under the roof-line would not constitute copying in any relevant sense. 40 We assume that the ground of appeal that alleges that his Honour erred in considering whether Metricon's plans and houses were reproductions of a substantial part of a substantial part (the alfresco quadrant) of the Seattle design rather than the statutory question posed by the Act is also based on the contention that his Honour did not properly identify the part taken from the Seattle design. Once it is recognised that his Honour identified the part taken as the alfresco quadrant, this ground of appeal necessarily fails. 41 We deal below with the Metricon Parties' submissions that because of the differences in details such as the placement and size of windows and doors and means of access, it was not open to his Honour to conclude that the part taken was the entire alfresco quadrant.

WAS THE ALFRESCO QUADRANT A SUBSTANTIAL PART OF THE COPYRIGHT WORKS?

The authorities 42 It is trite that the dominant principle of copyright law is that protection is given, not for ideas, but only for the form of expression (Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 per Mason CJ at 303 citing Lord Hailsham of St Marylebone in LB (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 at 629). Copyright cannot subsist in the idea of a house with an alfresco quadrant to the side of the back portion of the house. However, copyright can subsist in a plan that reflects that idea for a house. Whether it does or not will depend on whether the plan is an original artistic work within the meaning of s 32(1) of the Act. The plan will be an original artistic work in the statutory sense if it is recognisably the author's own work as opposed to a copy of another's work or a trivial variation on another's work (see Lahore J, Copyright and Designs (looseleaf, Butterworths, 1996) at [2110] citing University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601 at 608-9). 43 In this case the Metricon Parties conceded that copyright subsists in the Copyright Works. They thereby conceded that the Copyright Works were original artistic works within the meaning of s 32(1) of the Act. Their reliance on evidence which tended to show that the arrangement of a rumpus, family, kitchen and meals room around a courtyard or patio to the side of a home was commonplace in the industry sits uncomfortably with this concession. 44 As the primary judge acknowledged, the proper approach to determining whether a part of a work is a "substantial part" within the meaning of s 14(1) of the Act is reflected in the observations of Mason CJ, in dissent, in Autodesk Inc v Dyason (No 2) at 305. The Chief Justice there said: It is clear that the phrase 'substantial part' refers to the quality of what is taken rather than the quantity. In Ladbroke (Football) Ltd v William Hill (Football) Ltd, Lord Pearce stated: '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.' As this statement makes clear, in determining whether the quality of what is taken makes it a 'substantial part' of the copyright work, it is important to inquire into the importance which the taken portion bears in relation to the work as a whole: is it an 'essential' or 'material' part of the work? …in the context of copyright law, where emphasis is to be placed upon the 'originality' of the work's expression, the essential or material features of a work should be ascertained by considering the originality of the part allegedly taken. This is particularly important in the case of functional works, such as a computer program, or any works which do not attract protection as ends in themselves (eg, novels, films, dramatic works) but as means to an end (eg, compilations, tables, logos and devices). 45 We note, incidentally, that while neither a house plan nor a constructed house is exactly a "functional work" of the kind identified by the Chief Justice in the above passage from Autodesk Inc v Dyason (No 2), a project home is nearer in concept to a "functional work" than the types of work with which his Honour drew a contrast. That is, a project home is more of a 'functional work' than a novel, film or drama, which necessarily attracts copyright protection. We therefore conclude that in determining whether the quality of what is taken from a plan for a project home in which copyright subsists makes it a "substantial part" of the copyright work it is important to consider the originality of the part allegedly taken. 46 This is the approach adopted in Tamawood Ltd v Henley Arch Pty Ltd (2004) 61 IPR 378 where Wilcox and Lindgren JJ at [38] and [55] observed: The application of the law of copyright to project home plans gives rise to special difficulty. All modern homes have certain features in common. In the case of project homes competing for the same number of dollars, there are pressures towards sameness…. Nor do we accept [the respondents'] submission that any part of a work which, considered in isolation, satisfies the low threshold of originality for the purpose of the subsistence of copyright, will necessarily constitute a substantial part of that work for the purpose of infringement. The reason is that it is not infringement of the part, but infringement of the whole that is in question. Whether there has been an infringement of the whole requires that the originality of the part be considered in relation to the work in suit as a whole. It must be determined whether the part is an 'essential or material' feature of the whole work, regarded as a copyright work, in the present case, as an artistic work. In our opinion, it must be asked whether the part or parts taken represent a substantial part of the labour, skill and judgment of the author that made the whole work 'original'. Factual questions of degrees of 'significance' or 'importance' of the part to the whole are involved. (emphases in original)

Findings of the primary judge 47 The primary judge at [34] found that the Barrett Parties had invested significant amounts of labour, skill and judgment in the development of the plans for the Barrett Houses. Additionally, his Honour at [37] found that the distinctive and essential feature of the designs is the alfresco quadrant. His Honour at [42] held that the alfresco quadrant was a substantial part of the Copyright Works within the meaning of s 14(1) of the Act. He rejected the contention that the key feature of the Copyright Works, including the alfresco quadrant, were merely aspects of commonplace designs created before the Copyright Works came into existence.

Submissions of the Metricon Parties 48 The Metricon Parties contended that the primary judge erred in holding that the alfresco quadrant was a substantial part of the Copyright Works. They placed reliance on the evidence which, as they contended, indicated that the design of the alfresco quadrant of the Copyright Works did not involve substantial time and work. They contended that his Honour should have found that: (a) the arrangement of bedrooms 2, 3 and 4 and associated wet areas, rumpus, family, kitchen and meals rooms around an outdoor space to the side of a home was a common place or stock feature in the project homes industry; (b) it was common to roof over the outdoor space referred to in (a); and (c) in any event, including the outdoor space referred to in (a) above under the single roof line was a mere idea or construction principle, incapable of copyright protection. 49 The Metricon Parties additionally contended that the primary judge erred in confusing the time and work for the development of the Seattle plan as a whole with the labour, judgment and skill expended by the Barrett Parties in including the outdoor space or alfresco under a single roof-line of the house. This contention is based on the false premise identified above; namely that what the Metricon Parties copied from the Copyright Works was less than the alfresco quadrant (see [24] above). The unambiguous finding of his Honour was that the alfresco quadrant of the Prada plan and Prada house had been copied from the Copyright Works. 50 Moreover, as indicated above, it is the originality of the part taken from a copyright plan for a project home that has critical importance for a finding that the part taken was a substantial part of the copyright work. While not necessarily without significance, the time and labour expended on the relevant part is of lesser significance. A highly original planning concept for a project home might come to the mind of a skilled designer in a flash and be readily reflected in an easily produced plan. The part of the plan in which the concept was reflected would nonetheless be highly likely, because of its originality, to constitute a substantial part of the plan thereby produced. 51 Nonetheless, we give consideration to the argument that his Honour should have found that the alfresco quadrant was not a substantial part of the Copyright Works as its design did not involve substantial time and work because: (a) Mr Studdert created the arrangement of rumpus, family, kitchen and meals rooms around an outdoor space or alfresco in a single sketch on 30 July 1999; and (b) the outdoor space or alfresco was included under the single roof-line in a single drawing on 20 August 1999.

The evidence 52 The evidence discloses the following design history of the Seattle plan. In June 1999 Mr Studdert, a director of the Barrett Parties, met with Mr Fuller, a contract designer, and explained to him that he wanted to create a single storey project home which had the large master bedroom suite usually associated only with double storey house designs. Mr Fuller prepared some sketches but ultimately Mr Studdert and another director of the Barrett parties decided to engage another designer. They engaged Mr Pye, who was then self-employed, and gave him the sketches prepared by Mr Fuller. A designer employed by Mr Pye prepared initial concept drawings which Mr Pye discussed with Mr Studdert. Thereafter Mr Pye provided to Mr Studdert four draft floor plan concepts. One of the draft floor plan concepts includes recognisable features of what became the Seattle design. It has bedrooms three and four plus a rumpus room at the rear of the house and a family and meals areas facing to the side. 53 On 30 July 1999 Mr Studdert made refinements to the draft floor plan described above and passed his drawings back to Mr Pye. Mr Studdert's drawings were even closer than Mr Pye's draft floor plan to what ultimately became the Seattle design. In particular, the alfresco quadrant had been realigned so as to allow it to be included under a single roof-line. There were further exchanges of drawings between Mr Pye and Mr Studdert until on about 20 August 1999 the basic floor plan for the Seattle house was settled. On that day, after discussion between Mr Studdert and Mr Pye concerning options for the roof of the Seattle house, it was decided to cover the alfresco dining area with the main roof. Mr Studdert and his co-director thought that this was a great idea and were additionally impressed by the fact that it was cheaper to keep the roof-line straight.

Consideration 54 The Metricon Parties' argument that Mr Studdart created the floor plan for the alfresco quadrant of the Copyright Works on a single sketch on 30 July 1999 is refuted by the history outlined above. Examination of the drawings and plans exhibited to the affidavits sworn respectively by Mr Studdart and Mr Pye reveals that the alfresco quadrant of the Seattle design was itself the product of considerable design evolution. The evidence does not support the suggestion that, while the other aspects of the Seattle design were the product of labour, skill and judgment, the alfresco quadrant emerged fully formed in a single drawing. We therefore see no reason to conclude that his Honour confused the time and work for the development of the Seattle plan as a whole with the time and work for the development of its alfresco quadrant. 55 The argument that the outdoor space forming part of the alfresco quadrant was included under the single roof in a single drawing on 20 August 1999 is, in part, accurate. It was on that day that the design decision was taken to cover the outdoor area with the main roof thus giving rise to a straight, and therefore inexpensive, roof-line. However, the design that made possible that choice had evolved over a significant period of time. 56 The conclusion of the primary judge that the alfresco quadrant was a substantial part of the Copyright Works within the meaning of s 14(1) of the Act was based on matters of impression and degree. It would be inappropriate for the Court to depart from his Honour's conclusion unless persuaded that his Honour erred in principle or reached a conclusion that is plainly or obviously wrong. We are not so persuaded. Indeed, having considered for ourselves the evidence adduced before his Honour we have formed the view that his Honour was correct. 57 The complaint of the Metricon parties that the primary judge disregarded, or gave insufficient weight to, the evidence adduced by them about the configuration of houses that "live to the side" is difficult to address as the evidence relied upon was not identified. 58 However, it is clear that the primary judge addressed an argument made by the Metricon Parties concerning the limited design options open for a house so configured. At [59]-[60] his Honour observed: In short, so the respondents' argument goes, in the ordinary course, a Melbourne project home that lives to the side and which includes an alfresco, rumpus, family and dining or meals rooms would be designed inevitably in the same way as the Seattle 31 plan. This is a proposition which, in my opinion, ought to have been the subject of expert opinion testimony. It was not. I do not accept the respondents' contention. The evidence is to the contrary. For example, Bugeja identified five examples of alfrescos living to the side from the Perth trip. He also identified a further ten alfrescos that lived to the rear and side. Not one of these is essentially the same as the alfresco in the Seattle 31. Not one of the twelve prior art items cited particularly by the respondents discloses an alfresco, as expressed in the Seattle 31 design, under a single roof-line. 59 As the above paragraphs reveal, his Honour disregarded, or gave little weight to, the argument made by the Metricon Parties for two reasons. The first was that the argument was not supported by expert opinion evidence. The second was that the argument was inconsistent with the factual evidence before his Honour in the form of floor plans. We do not see that his Honour's above approach is open to criticism. 60 Some evidence was adduced before his Honour to the effect that the scope for innovative design of project homes is limited and that houses tend either to "live to the back" or "live to the side". There is no reason to think that his Honour did not accord proper weight to this evidence. Indeed, at [15]-[17] his Honour appropriately observed: Project homes, and the drawing of such plans, are distinct from paintings and musical works. The distinction lies in the fact that a project home involves a mixture of familiar ideas and common place features 'based on the real world' (in the form of previous project homes and plans) and 'labour, skill and judgment (in combining the various features)': Tamawood at [41]-[43]. The issue is further complicated when one bears in mind that the plan for a project home is 'partly functional.' For example, placing a kitchen in reasonable 'proximity to a dining room' is, broadly, a functional consideration: see Tamawood at [41]. Accordingly, the 'dividing line between that which is dictated by broad functional requirements and that which is not, is…often unclear': Tamawood at [56]. Importantly, one must bear in mind in this case, and as was explained in Tamawood, that an individual part of a plan or home considered in isolation may merely explain a common idea '…yet there will be copyright in the whole plan if the combination and arrangement originated with the author.' (Emphasis added): Tamawood at [41]. The applicants in this case point to the particular combination in the alfresco quadrant as central to their claims. 61 We reject the contention that the primary judge erred in concluding that the alfresco quadrant was a substantial part of each of the Copyright Works. 62 After we had completed these reasons for judgment in draft Heerey J published reasons for judgment in Barrett Property Group Pty Ltd v Carlisle Homes Pty Ltd [2008] FCA 375. We note that his Honour at [81] expressed his respectful agreement with the conclusion and reasons of the primary judge in this matter on the question of whether the alfresco quadrant was a substantial part of the Seattle and Memphis designs.

THREE DIMENSIONAL FEATURES 63 A further ground of appeal was that the primary judge erred in holding that the Prada house was a reproduction of the Barrett Houses without considering all of the three dimensional features of the respective houses. 64 No criticism was made of his Honour's observation at [18] that: The test for infringement is found in the well known passage from the judgment of Gibbs CJ in S W Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 472 (with whom Mason and Brennan JJ agreed). In that case, the Chief Justice said: The notion of reproduction, for the purposes of copyright law, involves two elements - resemblance to, and actual use of, the copyright work, or, to adopt the words which appear in the judgment of Willmer LJ in Francis Day & Hunter Ltd v Bron [1963] Ch 587 at 614, 'a sufficient degree of objective similarity between the two works' and 'some causal connection between the plaintiffs' and the defendants'work'. (Emphasis added by primary judge) 65 The primary judge was taken on a view during which both parties, by their respective counsel, were able to draw features of the various houses to his Honour's attention. His Honour's reasons for judgment at [39] note that the parties agreed that his Honour's impression of the Copyright Works and the Metricon Houses from his inspection were to form part of the evidence (see also s 54 of the Evidence Act 1995 (Cth)). 66 At [39]-[40] of his reasons for judgment the primary judge recorded his impressions on inspection of the Seattle house - including his observations concerning the roof-line viewed on an external inspection of the house. At [83] of his reasons for judgment the primary judge noted that his observations of the Seattle house were substantially the same as those concerning the Prada. In the same paragraph his Honour recorded his conclusion in the following way: …Therefore, after inspecting the Seattle 31 home and the Prada 35 home, I find that there are sufficient objective similarities between the works so to satisfy the SW Hart test. The same holding applies with respect to the Memphis 33 home and the Prada 35 home. 67 The primary judge's reasons for judgment comprise 292 paragraphs. It was (understandably) not submitted that his Honour failed to provide adequate reasons for the judgment pronounced by him. As the above passages from his Honour's reasons for judgment reveal, he was alert to the test for infringement and also to the requirement that he make a visual comparison "home to home". His Honour was not required to identify in his reasons for judgment every three dimensional feature of the respective houses to which he had regard in concluding that the Prada house was a reproduction of the Barrett Houses. In the circumstances we see no reason to conclude that his Honour did not consider all of the three dimensional features of the respective houses before concluding that the Prada house was a reproduction of the Barrett Houses. 68 This ground of appeal also fails.

SECONDARY PLANS AND HOUSES 69 The notice of appeal also challenged the primary judge's finding that the Tyrell, Connolly, Coburn and Streeton (the secondary plans and houses) each reproduced a substantial part of the Copyright Works. The notice of appeal also included the following grounds: 8. His Honour should have found that: (a) the Tyrell and Connolly plans and houses were made by modifying the first Appellant's Manhattan design to include the outdoor space under the houses' single roof line; (b) the Streeton plans and houses were made by modifying the first Appellant's Carrington and Burton designs to include the outdoor space under the houses' single roof line; and (c) the Tyrell, Connolly and Streeton plans and houses did not reproduce the whole or any substantial part of the Respondents' works. 9. His Honour erred in finding that the first Appellant's Coburn plan and house were copied from the Respondent's work. (numbers qualifying houses and plans omitted) 70 We consider it appropriate to assume that these latter two grounds are, at least in part, particulars of the ground first identified above. This conclusion finds support in the oral submissions of the appellant.

Coburn 71 The Metricon Parties identified their case concerning the Coburn plan and house as their strongest so far as their challenge to the primary judge's conclusions concerning the secondary plans and houses is concerned. It is not clear from the written and oral submissions of the Metricon Parties whether they sought to support their ground of appeal that the primary judge erred in finding that the Coburn plan and house were copied from the Copyright Works. In the circumstances it is necessary to consider the ground of appeal. 72 As we have already observed, in concluding that the Coburn plan and house infringed copyright in the Copyright Works, the primary judge placed reliance on his own observations and on the expert evidence of Dr Cooke. Dr Cooke undertook four relevant comparisons: (a) comparison of Seattle plans to Coburn plans; (b) comparison of Seattle house to Coburn house; (c) comparison of Memphis plans to Coburn plans; and (d) comparison of Memphis house to Coburn house. 73 Dr Cooke's conclusions following comparison of the Seattle plans and the Coburn plans were as follows: Seen as a whole and in isolation from the Prada plans, the Coburn plans are dissimilar in many respects from the Seattle, although the nucleus of the plan has, in my view, been derived by reference to the Seattle plan. When the Prada plans are taken into consideration, the link between the Prada and the Seattle is more obvious than the link between the Seattle and the Coburn because, in my view, the Coburn has been derived from the Prada which was in turn largely derived from the Seattle. The influence of the Seattle plans on the Coburn plans has therefore become attenuated as the result of the derivation of the Coburn plans from the Prada plans with enlargements and planning changes in the process. In my opinion the rear section of the Coburn 33, Coburn 36 and Coburn 39 plans, each being a version of the corresponding area in the Prada 35 and Prada 35 (Mk II), was derived by reference to the Seattle Plan and is substantially a modified copy of the corresponding area in the Seattle. 74 On the basis of an inspection of a Seattle house and a Coburn house, Dr Cooke concluded that the significance of the Coburn alfresco and the relationship between it and the surrounding areas was as high as in the other houses with that planning configuration. 75 After comparing the Memphis plans and the Coburn plans Dr Cooke concluded: In my view the Coburn 33 has been prepared with reference to the Memphis plan; and the Coburn has a plan type that has been copied from the Memphis and then modified by moving the Alfresco, reorganizing the front part of the plan and making alterations to the detailed planning of the subsidiary bedroom area. The nucleus of a major part of the plan in both the Coburn 33 and the Memphis 33 is the Alfresco,…the Alfresco and Dining areas in the Coburn 33 are not in the same position as that in the Memphis 33 and there are numerous differences in the details of the plan as described above. In addition, the Kitchen in the Coburn 33 is a rectangular galley shape on plan, whereas that in the Memphis 33 has an angled front bench. On balance, in my view a substantial part of the Coburn 33 plan is a modified copy of the Memphis. The similarities between the two plans to my mind indicate copying, with modifications, of a substantial part of the Memphis plan rather than the mere influence of significant planning ideas. 76 Dr Cooke's comparison of a Memphis house and a Coburn house led Dr Cooke to the same conclusion as he reached in respect of the comparison of the Seattle house and the Coburn house. 77 For reasons that have not been challenged, the primary judge did not place any weight on the expert opinion evidence adduced by the Metricon Parties. As mentioned above, his Honour rejected the evidence of the witnesses called by the Metricon Parties who were directly involved in the development of the Prada design. His Honour thus had no evidence before him capable of providing an explanation other than copying for the objective similarities between the Coburn plan and house and the Copyright Works. The Metricon Parties did not deny that they had access to the Copyright Works. 78 Our examination of the plans confirms the obvious differences identified by Dr Cooke between the plans for the Barrett Houses, on the one hand, and the Coburn plan on the other. However, those differences are not so great as to render obviously untenable a finding that there is sufficient objective similarity between them to render the Coburn plan and house a reproduction of a substantial part of the Copyright Works. We were not invited by the parties to view the Barrett Houses or the Coburn house. 79 Dr Cooke expressed the opinions (a) that the Coburn plan was derived from the Prada which had in turn been derived from the Seattle and (b) that the Coburn was the product of copying with modifications of a substantial part of the Memphis plan. These opinions are to be understood against the accepted fact that, as mentioned above, the Memphis is an adaptation of the Seattle. 80 We conclude that it was open to the primary judge to accept the opinion evidence of Dr Cooke that the Coburn plan and house were copied from the Copyright Works. The ground of appeal that his Honour erred in so doing, assuming it to have been pressed, therefore fails. 81 It nonetheless remains to be considered whether what was reproduced by the Coburn plan and house was a substantial part of one, or more than one, of the Copyright Works. The Metricon Parties submitted that the Coburn plan was "completely different" to the Seattle plan and that its alfresco quadrant was "fundamentally" different from the alfresco quadrant of the Seattle design. They argued that his Honour's conclusions concerning the Coburn plan suggested that his Honour gave too much weight to the idea of a covered outdoor area under the single roof. 82 The reference to the idea of a covered area under a single roof-line is presumably based on [244] of the reasons for judgment of the primary judge. In this paragraph his Honour records his acceptance of the opinion of Dr Cooke that the Coburn plan had been derived by reference to the Seattle plans via modification of the Prada plan. His Honour then observes that Dr Cooke's opinion accorded with his own impressions which he outlined as follows: The alfresco area, even though repositioned, is under one roof-line and on my view of the home, maintained the same distinct and significant impression. The changes are minor and inconsequential. (citation omitted) 83 In our view, his Honour's impression, as recorded in the above passage, does not attribute excessive weight to the idea of an outdoor area under a single roof-line. Rather, we understand his Honour to have placed weight principally on "the same distinct and significant impression" created by the alfresco areas of the respective plans. 84 We have concluded above that the primary judge rightly concluded that the alfresco quadrant was a substantial part of the Copyright Works. In our view it is plain that his Honour concluded that the Coburn plan and house reproduced the alfresco quadrant of the Copyright Works. For the reasons given above we are satisfied that it was open to his Honour to reach this conclusion. In this circumstance it would be inappropriate for the Court to disturb his Honour's finding. 85 The challenge to the finding of the primary judge that the Coburn plan and house reproduce a substantial part of the Copyright Works fails.

Other Secondary Plans and Houses 86 The Metricon parties did not challenge the primary judge's finding that the creation of the other secondary plans and houses involved copying from the Copyright Works. They thus faced a difficult task in persuading the Court that no infringement resulted. In Eagle Homes Pty Limited v Austec Homes Pty Ltd at [86] Lindgren J, with whom Finkelstein and Weinberg JJ agreed, observed: The requirement of a causal link excludes from infringement an "accidental and independent reproduction". But such a reproduction of a copyright work cannot be avoided (at least, in the absence of a system of registration of such works), whereas subjective copying can be. It is reasonable, therefore, to think that copyright law is concerned to protect against subjective copying and that where subjective copying occurs there can be expected to be found an infringement, unless it transpires that that the product is so dissimilar to the copyright work that the copyright work can no longer be seen in the work produced. 87 The contentions that the primary judge should have found that the alfresco quadrants of the other secondary plans and houses derived from Metricon designs rather than from the alfresco quadrants of the Copyright Works fly in the face of his Honour's findings on credibility to which reference has already been made. They are for this reason unsustainable. 88 It is not contentious that the Tyrell, Connolly and Streeton plans and houses have more in common with the Copyright Works than the Coburn plan and house. Dr Cooke expressed the expert opinion that the alfresco quadrant in the Tyrell, Connolly and Streeton plans and houses were subject to minor modifications, essentially the same on the Seattle plan and house. His Honour, informed by his own observations, accepted Dr Cooke's opinion. His Honour did not find that the Tyrell, Connolly and Streeton plans and houses reproduced the whole of the Copyright Works. He found that the Tyrell, Connolly and Streeton plans and houses reproduced a substantial part of the Copyright Works. No error has been shown to attend his Honour's finding.

Authorisation 89 The notice of appeal challenges the findings of the primary judge that each of Messrs Palazzesi and Popple authorised Metricon to infringe the Barrett Parties' copyright. However, senior counsel for the Metricon Parties made it clear that, if the primary judge's finding of infringement by Metricon was upheld, it was accepted that the finding of authorisation by Mr Popple would also stand. They contended, however, that no liability for authorising infringement should attach to Mr Palazzesi. 90 The Metricon Parties did not challenge the appropriateness of the approach adopted by the primary judge to the question of authorisation. His Honour referred to s 13(2), s 36(1) and s 36(1A) of the Act and to the principal authorities that have given consideration to those provisions (eg University of New South Wales v Moorehouse (1975) 133 CLR 1; WEA International Inc v Hanimex Corp Ltd (1987) 17 FCR 274; and Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380). 91 The primary judge made relevant findings concerning Mr Palazzesi that included the following:

Metricon would not have included the Prada in its product line without Mr Palazzesi's approval;
Mr Palazzesi approved Prototype 20B and the Tyrell, Streeton, Connolly and Coburn designs; and
Mr Palazzesi was likely to have seen the similarity between the back half of Prototype 20B and the back half of the Seattle before he approved Prototype 20B and the Prada design. 92 His Honour concluded that Mr Palazzesi "knowingly authorised the copying of the alfresco quadrant from the Seattle 31 plan and home in order to create the Prada 35 and, in turn, each of the [Metricon Houses]". 93 The primary judge's findings concerning Mr Palazzesi were based in large measure on his Honour's assessment of Mr Palazzesi's credibility and also on his Honour's assessment of the credibility of Metricon witnesses. The primary judge was plainly in a better position than this appeal court to make these assessments. 94 In our view this ground of appeal is unsustainable.

Conclusion 95 The appeal will be dismissed with costs. I certify that the preceding ninety-five (95) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Branson, Sundberg and Kenny.

Counsel for the Appellant: Mr D K Catterns QC with Mr W Rothnie

Solicitor for the Appellant: Davies Collison Cave

Counsel for the Respondent: Mr C D Golvan SC with Dr S Ricketson

Date of Hearing: 19, 20 February 2008

SCHEDULES Schedule A - Respondents' Seattle 31 Plan Schedule B - Appellants' Prada 35 Plan Schedule C - Appellants' Prototype 20A Schedule D - Appellants' Prototype 20B

Schedule B - Appellants' Prada 35 Plan Schedule C - Appellants' Prototype 20A

At a glance

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Judgment (33 paragraphs)

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Legislation Cited (3)

Cases Cited (14)