Henley Arch Pty Ltd v Tamawood Pty Ltd [2003] FCA 204

FEDERAL COURT OF AUSTRALIA

COPYRIGHT – whether a substantial part of the work had been reproduced – whether there was a sufficient degree of objective similarity between the works – whether unfair or unconscientious use of author’s plans by indirect copying

Copyright Act 1968 (Cth) ss 14, 21, 31, 32, 115, 119, 202

Trade Practices Act 1974 (Cth) s 52

Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 mentioned

LED Builders Pty Ltd v Eagle Homes Pty Ltd (1996) 35 IPR 215 approved

Dixon Investments Pty Ltd v Hall (1990) 18 IPR 490 approved

Ladbroke (Football) Ltd v Hill (William) (Football) Ltd [1964] 1 WLR 273 approved

Dixon Investments Pty Ltd v Hall (1990) 18 IPR 481 approved

Collier Constructions Pty Ltd v Foskett Pty Ltd (1990) 19 IPR 44 approved

Collier Constructions Pty Ltd v Foskett Pty Ltd (1991) 20 IPR 666 approved

S.W. Hart & Co Pty Ltd v Edwards Hot Water Systems [1985] 159 CLR 466 followed

Clarendon Homes (Aust) Pty Ltd & Anor v Henley Arch Pty Ltd and Ors 46 IPR 309 followed

Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971) 2 NSWLR 278 mentioned

Eagle Homes Pty Ltd v Austec Homes (1999) 87 FCR 415

LED Builders Pty Ltd v Masterton Homes (NSW) Pty Ltd (1994) 30 IPR 447 approved

HENLEY ARCH PTY LTD (ACN 007 316 930) and HENLEY PROPERTIES (QLD) PTY LTD (ACN 068 886 000 v TAMAWOOD PTY LTD, LEV MIZIKOVSKY and CHRISTINE GOULD

No V 75 of 1999

SPENDER J

BRISBANE

14 MARCH 2003

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	V 75 of 1999

BETWEEN:	HENLEY ARCH PTY LTD (ACN 007 316 930 and HENLEY PROPERTIES (QLD) PTY LTD (ACN 068 886 000) APPLICANT
AND:	TAMAWOOD PTY LTD, LEV MIZIKOVSKY and CHRISTINE GOULD RESPONDENT
AND BETWEEN:	TAMAWOOD PTY LTD and LEV MIZIKOVSKY CROSS-APPLICANTS
AND:	HENLEY ARCH PTY LTD (ACN 007 316 930) and HENLEY PROPERTIES (QLD) PTY LTD (ACN 068 886 000) FIRST AND SECOND CROSS-RESPONDENTS
AND:	KEN LEWIS, DES TAYLOR and KEVIN MORGAN THIRD, FOURTH AND FIFTH CROSS-RESPONDENTS
JUDGE:	SPENDER J
DATE OF ORDER:	14 MARCH 2003
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

Within 14 days the parties file and serve a draft minute of the orders that party contends should be made to give effect to these reasons, and file and serve written submissions on costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	V 75 of 1999

BETWEEN:	HENLEY ARCH PTY LTD (ACN 007 316 930 and HENLEY PROPERTIES (QLD) PTY LTD (ACN 068 886 000) APPLICANT
AND:	TAMAWOOD PTY LTD, LEV MIZIKOVSKY and CHRISTINE GOULD RESPONDENT
AND BETWEEN:	TAMAWOOD PTY LTD and LEV MIZIKOVSKY CROSS-APPLICANTS
AND:	HENLEY ARCH PTY LTD (ACN 007 316 930) and HENLEY PROPERTIES (QLD) PTY LTD (ACN 068 886 000) FIRST AND SECOND CROSS-RESPONDENTS
AND:	KEN LEWIS, DES TAYLOR and KEVIN MORGAN THIRD, FOURTH AND FIFTH CROSS-RESPONDENTS

JUDGE:	SPENDER J
DATE:	14 MARCH 2003
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1 These proceedings concern allegations of copyright infringement in house plans and houses built in accordance with those plans. I am presently concerned only with questions of liability.

2 The applicants are project home building companies. The second applicant (“Henley”) is a subsidiary of the first applicant (“Henley Arch”) and carries on business in Queensland. The first applicant claims to be the owner of copyright subsisting in Australia in the plans of a house known as the “Chirnside”(and the Chirnside house itself), and in plans and drawings of a house known as the “Baltimore” (and the Baltimore house itself). The second applicant is the exclusive licensee of the first applicant for the State of Queensland of the right to reproduce in a material form the works. Each of those works is claimed to be an original artistic work in which copyright subsists under the Copyright Act 1968 (Cth) (“the Act”).

3 Section 31(1)(b) of the Act relevantly provides:

“For the purposes of this Act, unless the contrary intention appears, copyright, in relation to a work, is the exclusive right:

…

(b) in the case of an artistic work, to do all or any of the following acts:

(i) to reproduce the work in a material form;

(ii) to publish the work;

(iii) to communicate the work to the public. …”

Section 21(3) of the Act provides:

“For the purposes of this Act, an artistic work shall be deemed to have been reproduced:

(a) in the case of a work in a two-dimensional form – if a version of the work is produced in a three-dimensional form; or

(b) in the case of a work in a three-dimensional form – if a version of the work is produced in a three-dimensional form;

and the version of the work so produced shall be deemed to be a reproduction of the work.”

Section 14(1) of the Act provides:

“(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.”

Section 115 of the Act provides:

“(1) Subject to this Act, the owner of a copyright may bring an action for an infringement of the copyright.

(2) Subject to this Act, the relief that a court may grant in an action for an infringement of copyright includes an injunction (subject to such terms, if any, as the court thinks fit) and either damages or an account of profits.

(3) Where, in an action for infringement of copyright, it is established that an infringement was committed but it is also established that, at the time of the infringement, the defendant was not aware, and had no reasonable grounds for suspecting, that the act constituting the infringement was an infringement of the copyright, the plaintiff is not entitled under this section to any damages against the defendant in respect of the infringement, but is entitled to an account of profits in respect of the infringement whether any other relief is granted under this section or not.

(4) Where, in an action under this section:

(a) an infringement of copyright is established; and

(b) the court is satisfied that it is proper to do so, having regard to:

(i) the flagrancy of the infringement; and

(ii) whether the infringement involved the conversion of a work or other subject-matter from hardcopy or analog form into a digital or other electronic machine-readable form; and

(iii) any benefit shown to have accrued to the defendant by reason of the infringement; and

(iv) all other relevant matters;

the court may, in assessing damages for the infringement, award such additional damages as it considers appropriate in the circumstances.

It follows that copyright in an artistic work is infringed by the reproduction of the work in a material form, including by the reproduction of a substantial part of the work.

4 The first respondent Tamawood Pty Ltd (“Tamawood”) is involved in the building of project homes, although it does not itself build them. It operates by promoting a range of homes to the public and facilitates the building of those homes by encouraging clients to contract directly with builders with whom Tamawood is associated. Tamawood carries on business in Queensland and the second respondent (Mr Mizikovsky) is its Managing Director.

5 The applicants allege that copyright in the Chirnside plans and the Chirnside house has been infringed by the production of plans of a house (which was formerly owned by the third respondent, Ms Gould) (“the Gould house”), and by the building of the Gould house. This Gould house was built according to plans drafted by Tamawood on lot 38, 23 Oakley Street, Carindale in Brisbane. Lot 38 is a north-facing, rectangular block in Oakley Street of 710 square metres, with a frontage of just over 21 metres and a depth of 33 ½ metres. Ms Gould became the registered owner of lot 38 on 10 July 1997.

6 Ms Gould in June 1997 inspected one of Henley’s Chirnside houses which was on display at Wishart, a suburb of Brisbane. She paid a $50 cash deposit on a Chirnside for the purpose of holding the price fixed, and a further $300 by cheque for the purpose of having work done to test the soil. She did not proceed with the construction of the Chirnside house but instead went to Tamawood. Tamawood and Ms Gould arranged for the construction of the Gould house. Tamawood said that the plan for this house was based on the “Adrian” house plan of Tamawood, but with changes to that plan directed by Ms Gould. The claim by Henley is that the Gould house quite systematically took a lot of the features of the Chirnside design, such as to amount to an infringement of the copyright of Henley in the Chirnside plans and house.

7 Some parts of the Gould house conform to the original Adrian plan, the bedroom configuration, the entrance configuration and the garage configuration by way of example. However, the original Adrian plan has had significant modifications including the omission of a number of internal walls so that one has an open plan to the dining and living room similar to that in the Chirnside design. There has been a conservatory-type meal area, a part- octagonal shape with full glass walls adjoining the kitchen area, and a number of the rectangular corners, both internal and external, have been truncated.

8 Henley also claims that the plans by Tamawood for a home which it advertised as the “Bern” reproduce the whole or a substantial part of the Baltimore plans, and the Baltimore buildings, and infringe Henley Arch’s copyright in the Baltimore plans and buildings.

9 Tamawood and Mr Mizikovsky cross-claim that the applicants have threatened them with an action or proceedings in respect of infringement of the rights of copyright in the Chirnside plans and house, relying particularly on a letter dated 24 December 1998 from the applicant’s solicitors to Tamawood and Mr Mizikovsky, and from 23 February 1999 threatened Tamawood and Mr Mizikovsky with an action or proceedings in respect of copyright claimed by Henley Arch in the Chirnside plans and house and the Baltimore plans and house. The application and statement of claim in these proceedings were filed in the Victorian Registry of the Federal Court on 22 February 1999. The cross claim asserts that these threats are unjustifiable. Section 202 of the Act permits a person who is threatened with an action or proceeding in respect of an infringement of copyright to bring an action against the person making the threat, and may obtain a declaration to the effect that the threats are unjustifiable. Relief based on groundless threats of legal proceedings will not be granted if the person making the threat of an action or proceeding in respect of the infringement of a copyright satisfies the Court that the acts in respect of which the action or proceeding was threatened constituted or, if done, would constitute an infringement of copyright.

10 Further, the cross claim alleges that the cross respondents made representations to customers of Tamawood and to members of the public that:

“(i) The first respondent has copied the first and/or second applicant’s plans, designs and/or houses;

(ii) The first respondent has advertised a plan and/or design that is a copy of the first and/or second applicant’s plans and/or designs;

(iii) The first respondent is a marketing company;

(iv) The first respondent has produced plans and/or designs that are a mirror image of the plans and/or designs of the first and/or second applicant;

(v) Customers of the first respondent have no choice about the nature or quality of the finish within homes constructed by the first respondent, its servants or agents.”

11 It is pleaded that the making of these representations constituted conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the Trade Practices Act). The majority of the case was concerned with the allegation of infringement of the Chirnside plans and house by the Gould plans and house.

12 As to the subsistence of copyright in house plans, where original plans have been published copyright subsists in them if, amongst other things, first publication took place in Australia or the author was an Australian resident at the time of publication: s 32(2) of the Act. Where an original artistic work is a building which is situated in Australia, then copyright subsists in that building: s 32(3) of the Act.

13 There is no argument that the Chirnside and Baltimore houses are situated in Australia and that the authors of the plans of those houses, Mr Shane Rogers and Mr Leon Edwards, were at all material times resident in Australia, and the plans of those houses were first published in Australia by the distribution of brochures containing copies of the plans.

14 For artistic works, as for literary works, the amount of originality required for copyright to subsist is not high. In Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479, Dixon J (as he then was) said at 511:

“…some original result must be produced. This does not mean that new or inventive ideas must be contributed. The work need show no literary or other skill or judgment. But it must originate with the author and be more than a copy of other material.”

15 Builders or architects plans are works in which copyright may subsist and be infringed. See the judgment of Sheppard J in LED Builders Pty Ltd v Masterton Homes (NSW) Pty Ltd (1994) 30 IPR 447 for a summary of the development of the law in this area. Where a plan is a simple one, however, an applicant’s case may be difficult to prove. In Dixon Investments Pty Ltd v Hall (1990) 18 IPR 481 at 483 (“Dixon Investments 1”), Pincus J said that

“[t]he simpler and more commonplace the copyright drawing, the more closely must the alleged infringer adhere to it, in order for liability to exist: Kinrick & Co v Lawrence & Co (1890) 25 QBD 99 at 102; Ownit Homes Pty Ltd v D & F Mancuso Investments Pty Ltd (1988) AIPC 90-488 at 38,243”.

16 Lord Reid pointed out in Ladbroke (Football) Ltd v Hill (William) (Football) Ltd [1964] 1 WLR 273 at 276 that whether a person has reproduced a substantial part of a work “depends much more on the quality than on the quantity of what he has taken”. See also Lord Evershed at 283. These dicta were followed by Pincus J in Dixon Investments 1 at 483 and by the Full Court, Lockhart, Spender and Ryan JJ, on appeal in Dixon Investments Pty Ltd v Hall (1990) 18 IPR 490 at 495 (“Dixon Investments 2”); and also by Gummow J in Collier Constructions Pty Ltd v Foskett Pty Ltd (1990) 19 IPR 44 at 49 and by the Full Court, Lockhart, French and Hill JJ, on appeal, in Collier Constructions Pty Ltd v Foskett Pty Ltd (1991) 20 IPR 666 at 669 (“Collier Constructions”). The Full Court in both Dixon Investments 2 and in Collier Constructions emphasised that one must examine the importance of the alleged substantial part in relation to the work as a whole: see the Full Court decisions of Dixon Investments at 494; Collier Constructions at 669.

17 There is no dispute in relation to the originality of the Baltimore plans and house. The Baltimore plans were the work of Mr Shane Rogers and Mr Leon Edwards.

18 Tamawood, by its cross-claim, asserts that the Chirnside plans and house are not original, and copyright does not subsist in them because they were copied from the Tamawood’s “Renee” design. Mr Shane Rogers gave evidence that he was the author of the Chirnside plans and his evidence supports the conclusion that there was substantial independent effort by him in the creation of the Chirnside plans. Mr Rogers’ evidence establishes that the ancestor of the Chirnside was Henley Arch’s “Camden” plans, which were created in 1991. Some time before September 1994, the Camden Mark 2 plans were drawn. This possessed a feature of a fully-glassed meal/conservatory area as an option, off the family room. Mr Rogers produced two possible options for future development, option A being a plan suited for a relatively wide but not relatively deep block of land, and option B for a narrower and deeper block of land. The option A developed into the Chirnside. No allegation of copying the Renee was put to Mr Rogers in cross-examination, and MrRogers in his affidavit evidence emphatically denied any copying of the Renee. There is no basis for the claim that the Chirnside plans were copied from the Renee design. I find that copyright resides in Henley Arch in the Chirnside plans and house, both Mr Rogers and Mr Edwards being employed by Henley Arch at all relevant times: see s 35(6) of the Act. The second applicant, as the exclusive licensee for the State of Queensland of the right to reproduce the Chirnside plans, amongst others, is entitled to sue for infringement of the copyright subsisting in those plans: s 119 of the Act.

19 The term “reproduce” or “reproduction” is not defined in the Act.

20 On what is a “reproduction” for the purposes of the Act, Gibbs CJ (with whom Mason J, and Brennan J on this point agreed), said in S.W. Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 472; 5 IPR 13 at 15:

“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 defendants’ work’. Lord Reid said in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] WLR 273 at 276; [1964] 1 All ER 465 at 469:

‘Broadly, reproduction means copying, and does not include cases where an author or compiler produces a substantially similar result by independent work without copying. And, if he does copy, the question whether he has copied a substantial part depends much more on the quality than on the quantity of what he has taken.’

… In the same case, Lord Evershed said [1964] 1 WLR at p 283; [1964] 1 All ER at p 473, ‘that what amounts in any case to substantial reproduction … cannot be defined in precise terms but must be a matter of fact and degree’.”

21 Where an author produces a substantially similar result by independent work, that result is not a “reproduction”. The reason is that there is “no actual use” of the copyright work, one of the two essential elements of a “reproduction”. The requirement for some “causal connection” between the works allows for what has been termed direct and indirect copying.

22 The Full Court (Heerey, Sundberg and Finkelstein JJ) in Clarendon Homes (Aust) Pty Ltd & Anor v Henley Arch Pty Ltd and Ors 46 IPR 309 said at par 28:

“…in a case where there has been deliberate copying, the court will not look kindly on a defendant when the plaintiff seeks to establish that what has been copied is sufficiently objectively similar to the plaintiff’s work. In Blackie & Sons Ltd v Lothian Book Publishing Co Pty Ltd (1921) 29 CLR 396 Starke J said at 404:

‘It is not for the court to make the way of the taker of copyright matter easy. It is a sound principle of copyright law that the court should not allow one man to take away the result “of another man’s labour, or, in other words, his property”, unless it is satisfied that the part taken is “so slight, and the effect upon the total composition was so small”, “as to render the taking perfectly immaterial”, or what is much the same thing, that the part taken is an unsubstantial part [citations omitted]’.

See also S.W. Hart & Co Pty Ltd v Edwards Hot Water Systems (1985) 159 CLR 466 at 484; 5 IPR 13 at 25 where Wilson J referred with approval to the judgment of Street J in Ancher, Mortlock, Murray & Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278 where his Honour acknowledged that his finding of infringement had been coloured by the unmeritorious use made by the defendant of the plaintiff’s work.”

23 Street J (as he then was), in Ancher, Mortlock, Murray &. Woolley Pty Ltd v Hooker Homes Pty Ltd [1971] 2 NSWLR 278, underlined the importance in a copyright suit involving architects’ plans of the question of how the alleged infringing work came into existence. His Honour said, at 284:

“An architect may legitimately inspect an original plan or house and then, having absorbed the architectural concept and appreciated the architectural style represented therein, return to his own drawing board and apply that concept and style to an original plan prepared by him and in due course to a house built to such plan. There is a dividing line separating such a legitimate process from an inspection followed by a later copying of a substantial part of the physical object inspected, even though the copying be from memory; the latter exercise does infringe. In many instances it will be difficult to state categorically whether the dividing line has been crossed. Cases will not always be black or white where the alleged copying is from memory. The borderline area is clouded by a band of grey within which opinions and conclusions may differ. Within this grey band conflicting answers could without error be given to the questions – is that plan or house only a copy of the concept or style of the original and hence legitimate ?, or is it a copy of the author’s manifestation of that concept or style and hence an infringement?

In this grey band, in answering such questions as these, it can be of critical importance to know how the architect who is said to have infringed went about the preparation and drawing of his plan. It is only after making a finding, either on direct evidence or by inference, of copying, that is to say, of unfair or unconscientious use of the author’s plan or building, that significance will attach to the degree of similarity. In a practical sense, of course, the degree of similarity is frequently a most telling element on the question of copying. To some extent the two aspects overlap, but they are distinct in point of principle and they must be considered with this distinction in mind.”

24 The Gould plans and house came about, I find, in the following way. Christine Gould and her partner, Mark Crompton, in June 1997 visited a number of display villages, in particular a display village at Wishart, at which were displayed homes built by Henley Arch, amongst others. They inspected a number of Henley homes in the display village, including a home called the Chirnside. She obtained a copy of the Chirnside plan when she was there.

25 She said in her affidavit that she purchased Lot 38 at 23 Oakley Street, Carindale, and had an independent site survey and soil test conducted on 30 June 1997 on that site. She made enquiries of Henley whether they would offer a house/land package on that block, but Henley indicated that it would have to do a soil test and site survey first, which would cost $300. Ms Gould indicated that she already had a site survey/soil test done at the time of purchase, but the sales representative of Henley indicated that they needed to do their own. Ms Gould says at a subsequent meeting at the Wishart Display Village, she paid $300 by cheque to have the soil test and site survey conducted, and also paid $50 in cash to “secure the current advertised price for house construction”. She was told by the sales representative that this in no way locked her in contractually, but it simply locked in the base price and was fully refundable.

26 Ms Gould was impressed by the Chirnside design, but there were a number of changes which she wished to make to it before it suited her needs, such as internal access from the garage to the house, linen storage, and storage in the laundry. At the time of the payment of the $300 by cheque and the $50 in cash, Ms Gould said that she discussed with the sales representative about variations to the basic house plan, such as internal access from the garage, additional power points and lights, additional external taps, security grilles and flyscreens, additional costs for tiling (the basic price only included wet tiling). “I asked for a quote to be given to establish a fixed construction price.” She says that in subsequent weeks she made numerous attempts to telephone to obtain a fixed price from the Henley Group, without success. She says at no time did she ever have any plan or representation of the Chirnside other than the brochure she had obtained. As the consequence of a recommendation by a work colleague, Ms Gould contacted a Tamawood sales representative, Richard Middleditch, in Tamawood’s Buranda office.

27 Ms Gould says that the Gould house arose from modifications to the standard Tamawood “Adrian” and “Samuel” designs, which modifications were made having regard to Ms Gould’s instructions to Mr Middleditch. She claims that there was no reference made to the Chirnside in arriving at the final design for the Gould house. She said that over the next few weeks she made various requests to alter the Adrian floor plan, either by phone to Mr Middleditch or in meetings with him. She denied any suggestion that she requested amendments to the standard Adrian design by reference to the Chirnside.

28 Exhibit 39 is a very important piece of evidence in these proceedings. Ms Gould agreed that it identifies the changes from the standard Adrian plan which were incorporated in the Gould house plan. A budget costing addendum to technical specifications bearing date 19 September 1997 lists a number of change requests, as follows:

“CHANGE REQUESTS

8 RANGEHOOD SUPPLY INSTALL $ 263

9 OVERHEAD CUPBOARD 1M $ 320

10 DISHWASHER $ 685

11 DBL IN LIEU OF SGL $ 275

12 SECURITY TO WINDOWS $ 1017

13 COLONIAL DOORS IN LIEU OF FLUSH DOORS $ 468

14 COLONIAL DOORS TO ROBES SLIDING $ 480

15 REDUCE RUMPUS 1M -$ 1518

16 EXTEND MEALS AS SHOWN $ 1510

17 WINDOWS FOR MEALS/FAMILY/RUMPUS AS SHOWN $ 1180

18 SHS COUPLERS FOR ABOVE $ 560

19 REDUCE LIVING/DINING 200MM -$433

20 HINGE DOOR IN LIEU OF 2118SD GARAGE -$ 78

21 DELETE 1206SW IN KITCHEN -$ 128

22 DELETE STUDY DOOR & ROBE -$ 380

23 WIR BED 1 AS SHOWN $ 100

24 DELETE 0618SW BED 1 -$ 180

25 INCREASE ROBE IN BED 2 $ 250

26 SITE EXCAVATIONS BY OWNER TO RL 12.2 APPROX -$ 350

27 DELETE WALLS/HAMPERS IN LIVING/DINING -$ 450

SUB TOTAL (A) $ 3591

37 500MM REDUCTION KITCHEN LIVING AS SHOWN -$ 431

38 1824SW IN LIEU OF BAY (WINDOW) BED 1 -$ 524

39 DELETE SECURITY TO FRONT WINDOWS -$ 132

40 2118 & 2115 SECURITY DOORS $ 430

41 VACUUM SEAL KITCHEN DOORS TO KITCHEN $ 350

42 1.2M SHOWER WITH ANGLE IN ENS, REDUCE BED 1

200MM INCREASE ENS DELETE VANITIES (BY OWNER) $ 377

SUB TOTAL (B) $1423”

The numbers in the left column correspond to the pictorial representation of the changes by Mr Middleditch on the “Salesman’s plan”, Exhibit 46.

29 On 6 October 1997 were further change requests:

“CHANGE REQUESTS

8 REDUCE RUMPUS 1M -$ 1518

9 EXTEND MEALS AS SHOWN $ 1510

10 WINDOWS FOR MEALS/FAMILY/RUMPUS AS SHOWN $ 1180

11 SHS POSTS FOR ABOVE $ 560

12 REDUCE LIVING/DINING 200MM -$ 433

13 HINGE DOOR IN LIEU OF 2118SD GARAGE -$ 78

14 DELETE 1206SW IN KITCHEN -$ 128

15 DELETE STUDY DOOR & ROBE -$ 380

16 WIR BED 1 AS SHOWN $ 100

17 DELETE 0618SW BED 1 -$ 180

18 INCREASE ROBE BED 2 $ 250

19 SITE EXCAVATIONS BY OWNER -$ 350

20 DELETE WALL/HAMPERS IN LIVING/DINING -$ 450

21 500M REDUCTION TO/KITCHEN/LIVING -$ 431

22 1824SW IN LIEU OF BAY (WINDOW) BED 1 -$524

23 DELETE SECURITY TO FRONT WINDOWS -$ 132

24 2118 & 2115 SECURITY DOORS $ 430

25 1.2M SHOWER WITH ANGLE IN ENS(UITE) REDUCE

BED 1 200MM $ 377

SUB TOTAL (A) -$ 197

35 350MM SET DOWN TO GARAGE $ 1050

36 DELETE VANITIES BY OWNER -$ 596.7

37 DELETE GABLES -$ 370.7

38 TIMBER SHELVING IN LIEU OF CLAIRSON LINEN/

ROBE (SHELVING) -$ 84.7

SUB TOTAL (B) $1353”

30 Ms Gould was cross-examined by Dr Emmerson, senior counsel for the applicants, concerning the changes. She agreed that the starting point was the Adrian. She said:

“… there were features taken from other homes as well.”

Dr Emmerson asked:

“Including, I suggest, the Chirnside?---No, the Chirnside was never referred to.

…

Are you saying that it’s mere coincidence that we have such a large number of changes which take the Adrian closer to the Chirnside?---Yes.”

It was put to Ms Gould:

“So your story is that you never mentioned that you’d been in touch with Henley in your dealings with Mr Middleditch; is that right?---I don’t recall ever discussing that with him.”

Her attention was drawn to her affidavit where she had sworn:

“However, I do recall telling Richard that the Henley Group told me to pay for a soil test survey before it would furnish me with a fixed price on a home.”

She said in response to this:

“When I told him that I didn’t specifically identify the Henley Group. What I said was other builders have indicated that I need to provide that information.”

31 Mr Crompton gave evidence that he and Ms Gould discussed Henley’s performance with Mr Middleditch, and Mr Middleditch confirms discussing Henley with her.

32 Mr Middleditch agreed that the change requests earlier set out was the costing of the changes which were made by him in consultation with Ms Gould. He agreed that the changes from the Adrian in the plans of the Gould house, as shown in Exhibit 39, were made at the direction of Ms Gould. Mr Middleditch gave evidence that he was unaware that Ms Gould had seen the Chirnside at Henley Arch, and said that Ms Gould did not mention the Chirnside to him. Mr Middleditch said that he did not discuss any part of the design of the Gould house with Mr Mizikovsky, because he did not regard them as substantial changes.

33 I do not accept Ms Gould when she says that she used the Tamawood plan “Samuel” during the design process. Mr Middleditch was vague as to whether the Samuel existed at the time he spoke with Ms Gould, could not recall giving a copy of it to her, and could not recall any modification made by reference to it. Mr Mizikovsky conceded that the Samuel design probably did not exist at the time of the Gould design process. Mr Crompton gave evidence that Ms Gould showed him a copy of the Samuel plan at the time he was shown the Adrian plan. This evidence does not appear in his affidavit. Ms Gould at par 21 of her affidavit, swore:

“Richard showed me a number of floor plans which he selected on the basis of the requirements which I had identified … These plans included the ‘Samuel’ and the ‘Adrian’. He also gave me a number of plans to take home with me. I do not now recall the number of plans he gave me but I do recall that he gave me, at least, a plan for the ‘Adrian’ design and the ‘Samuel’ design.”

She says at par 24:

“…I made various requests to alter the ‘Adrian’ floor plan either by phone to Richard or in meetings with Richard. These changes were made in consultation with Richard. These changes included:

· the repositioning of the meals area to an external area.

I liked the shape of the meals area in the ‘Adrian’ as I had a round table. But I did not want to be coming through the entry to the house and looking at the main eating area from the front entry; so I moved it to in a position in between the rumpus and the kitchen.

· change to bedroom one, bedroom 5 and the study to make them more like the ‘Samuel’ plan.”

And at par 27 she said:

“At no time during this period did I discuss the ‘Chirnside’ design, features, plan or any qualities of the ‘Chirnside’ home with Richard. From the outset, we worked with the ‘Adrian’ floor plan and made changes to it so that it suited my requirements. We also used some parts of the ‘Samuel’.”

34 When Ms Gould requested changes to bedroom 1 and bedroom 5, she made no reference to the Samuel design. The facsimile from her to Mr Middleditch requesting changes to these rooms does not refer to the Samuel. In cross-examination Ms Gould conceded that the plan attached to her facsimile must have been an Adrian plan and not a Samuel plan, and concedes that had a Samuel plan been attached to her facsimile, it would not have been necessary to request the changes that were requested in the facsimile.

35 There is no reference to the Samuel in Mr Middleditch’s affidavit, in Mr Crompton’s affidavit, nor in Mr Middleton’s affidavit. There is no reference to the Samuel design in any of the documents tendered in evidence or discovered by the respondents forming the developmental documents for the Gould house, nor any copy of the Samuel floor plan among those developmental documents.

36 Importantly, I simply do not believe Ms Gould when she said that the amendments she requested to the standard Adrian design were made without any reference to the Chirnside brochure which she had received. The very significant addition of a polygonal, fully-glassed meals area adjoining the kitchen is a striking change from the Adrian, and a major feature of the Chirnside. Ms Gould did not say that she wanted that idea or feature of the Chirnside incorporated in her house, the working out of which she left to Tamawood. She claims not to have been influenced by the Chirnside in the least in requesting that feature.

37 An unusual and striking feature of both the Chirnside and the Gould homes is the pair of pilasters about two-thirds of the height from floor to ceiling which flank the corridor leading from the lounge-dining area of the houses to the rear part of the house. It was put to Ms Gould:

“So is it your evidence that it’s mere coincidence that this further feature is something which you saw in the Chirnside and which you decided to have incorporated in your house?---It was a feature that was in a pre-existing house that I’d lived in previously. That it was in the Chirnside I can’t answer that question. Where I got that idea from was from a house I lived in previously.”

38 I do not accept that Ms Gould is being truthful in this explanation, and her account is motivated by a desire not to acknowledge that any of the changes that she obtained in the house as built had their origin in the Chirnside plans. I am satisfied that almost all of the changes sought by Ms Gould were requested by her so as to bring the house she wanted built in line with the Chirnside plans.

39 I have serious reservations about the claims by Mr Middleditch that he was unaware of the Chirnside or of the fact that the changes which he made to the standard Adrian plan at Ms Gould’s request were because of features of the Chirnside house which she wished to have incorporated in her own. I cannot positively conclude that the changes he made were, to his knowledge, done by reference to the Chirnside plan. I accept the evidence of Jason Middleton as to his part in the preparation of the Gould house plans and that he was unaware of any possible connection with the changes he drew and the Chirnside plans of Henley Arch.

40 I find that there are a large number of important similarities between the Gould and the Chirnside plans and houses. Some of those similarities by themselves would not necessarily be remarkable, but in combination they point strongly to the conclusion I reach that the modifications to the standard Adrian plan were requested by Ms Gould to bring the Adrian plan into line with the Chirnside design of Henley Arch.

41 I set out those similarities:

· The arrangement of the rooms and their relationship to one another is almost identical in each design;

· The outline or footprint of each design is substantially identical;

· Each design has the identical angled corner on the wall of the WIR to bedroom 1, the kitchen bench and the external rumpus room corner;

· The entrance to, and WIR in, Bedroom 1 are substantially identical in each design;

· The position, arrangement and relationship in bedroom 1 of the en suite, WIR, entrance and windows in each design is identical. Neither room has a bay window;

· The arrangement of the fittings in the en suite of bedroom 1 are identical although mirror reversed (the plan of the Gould design does not accurately reflect the Gould en suite as built);

· The windows in and entrance to bedroom 5/study are substantially identical in each design, and in each design there are no built in robes;

· The living and dining areas in each design are open plan, of identical shape, have their windows in the same position, and are situated in the same position to other rooms in the house in each design. In particular, the dining room wall is angled in each design;

· In each design, there are pilasters (plaster designed to look like columns) between the living room and dining rooms areas and the back part of the house;

· The kitchen in each design has the same layout (sinks and hot plates are in the same position) and the same angled bench;

· The meals area in each design is a projected glassed conservatory area that is adjacent to the kitchen, family and rumpus area;

· In each design the meals area opens onto a paved courtyard;

· In each design, the family, meals and rumpus areas are open plan;

· In each design the external walls in the meals and rumpus areas are entirely glass with a glass sliding door;

· In each design the external corner of the rumpus room is angled;

· In each design all bedrooms, including subsidiary bedrooms, are in the same position and have windows in the same position;

· The layout in the bathrooms is the same; and

· In each design there are no windows in the garage.

It is also relevant to have regard to the changes to the standard Adrian design to achieve some of these similarities, which changes appear from Exhibit 39.

42 When one compares the Chirnside plan with the Gould plan, the objective similarity is in my assessment overwhelming: cf Eagle Homes Pty Ltd v Austec Homes (1999) 87 FCR 415, a judgment of the Full Court where the Court seems to have allowed an appeal from an assessment of the primary judge on the basis that once subjective copying is found, infringement follows “unless it transpires that the product is so dissimilar to the copyright work that the copyright work can no longer be seen in the work produced.” This basis, which I respectfully find quite surprising, seems to ignore the possibility of the case where there is subjective copying, but what is copied is not a substantial part of the work, or to ignore the very real distinction between an idea and a particular expression of that idea. Questions of the “essential features and substance” are more at home in patent law. Copyright is not to protect ideas or concepts, but the particular expression of them.

43 There are, of course, differences between the Gould house as designed, and the Chirnside house design. The Chirnside house has no internal access to the house from the garage, and the configuration of the bathroom and laundry and bedrooms 2, 3 and 4 are quite different. These are some of the important differences.

44 There is in this case a high degree of objective similarity, and I accept that there was a causal connection between the Chirnside plans and the Gould plans and house, because of the quality and extent of the changes requested by Ms Gould, and the reason for those requests.

45 I am unable to conclude that there was any direct copying or tracing of the Chirnside plans by Tamawood. The requests or directions of Ms Gould lead to the result that it can fairly be said that the Gould plans are a reproduction of the Chirnside plans, or a substantial part of them.

46 In LED Builders Pty Ltd v Eagle Homes Pty Ltd (1996) 35 IPR 215 at 225, Davies J held that while, in that case, the respondent did not ask its draftsmen to copy the applicant’s plans but instead

“gave them instructions for change, both by way of sketches and orally but principally orally, which when implemented would bring [the respondent’s] plans into line with [the applicant’s] … there was deliberate copying by [the respondent] of the [applicant’s] plans, though the copying was achieved by the giving of instructions for change rather than the direct tracing of one plan from another.”

Davies J concluded there was a causal connection between the respondent’s plans and those of the applicant.

47 I hold that the Gould plans and house constitutes an infringement of the copyright of Henley Arch in the Chirnside plans and house. In my judgment Ms Gould infringed copyright in the Chirnside plans by procuring the production of plans for her house and the building of her house in accordance with those plans. While I have very real suspicions as to the knowledge by Mr Middleditch of the Chirnside plans and the significance of those plans to the requests made by Ms Gould, I am unable to be satisfied that that infringement by Tamawood was a deliberate or knowing one. Nor am I satisfied that Mr Mizikovsky, when he approved the changes to the Adrian drawn by Mr Jason Middleton, knew or suspected that they came about so as to bring Ms Gould’s house “into line” with the Chirnside design.

48 Mr Mizikovsky agreed that a plan called Chicago in fact was developed at the end of 1997, and it was developed to compete with the Chirnside. The existence of the Chicago development documents and the Chicago design in the Gould customer file was said by Mr Mizikovsky to be “an error”. The plans for the Gould house were approved by the Brisbane City Council on 4 November 1997, and Ms Gould’s house was completed on 19 March 1998.

49 The evidence concerning the Samuel plan as being a basis for some of the changes, an explanation impossible to believe given the fact that the Samuel plan in my opinion did not exist in July/August 1997, and the extraordinary appearance of the “Chicago” plan in the customer file for Gould, notwithstanding that the Chicago design was not created until some 18 months after the date claimed by Mr Mizikovsky in his affidavit, ground those suspicions but are not sufficient to enable me to conclude positively that Tamawood were aware that the changes sought by Ms Gould were to bring the plans for her house into line with the Chirnside design.

50 I turn to the question of the claimed infringement of the Baltimore plans and home by the Bern plans. Mr Mizikovsky agreed that Tamawood had a company policy of obtaining plans for Henley houses and making competing houses. He said:

“For a period of time we released a number of homes … that were designed to compliment our advertising campaign that were intended to have similar features I would call - which means similar utility and were exact in size, yes.”

He agreed that he “put on the market designs which he hoped would compete with those Henley designs” and he admitted that he “made those designs knowing the Henley designs.” He agreed that he “wanted potential customers to associate the designs [he] had made with the corresponding Henley designs.” He agreed that for that reason he gave the houses in his range “the same initial letter or occasionally the same two or three letters as in the Henley range.” He was asked:

“The Bern plan was produced as part of this plan to compete with Henley by obtaining copies of the Henley designs and producing a Tamawood design with a name that began with the same letter. Is that right?---Oh, yes.”

The Bern was produced to compete with Henley Arch’s Baltimore, the Berwick competed with Henley’s Bentley, and Berwick 29 was put out as a result of Henley’s Bentley 29. New York was put out to compete with Henley’s Newport; the Los Angelos 36 to compete with Henley’s Lodge 36; Oxford 35 to compete with the Oakridge 35; the Budapest 29 to compete with the Bentley 29.

51 Mr Mizikovsky agreed that for a period of time, when a Henley plan came out he prepared a plan to compete with it, and he gave it a name which had the same initial letters. In cross-examination he was asked:

“…can I take it then that in your mind, when conducting your business, you didn’t pay attention to whether your plans were closely similar to Henley plans?---We checked every single plan to make sure there were no accidental copyright infringements. Henley got a reputation for suing pretty much every major competitor in every market. We were very aware of consequences, and every plan was checked by me thoroughly; compared to make sure that not even a tiniest element accidentally, I suppose, ended up being identical or similar or closely resembling one of the Henley elements. In addition, I thought – after checking that, I thought if I give them the plans they can do the same and avoid the cost of litigation.”

And later:

“You stopped the Bern plan, didn’t you?---Only after Henleys came to us. We checked with our sales people. There were none sold, there were none in progress. We decided that in fact cost of litigation to protect a design that had not sold a single home wasn’t really a viable proposition, so we immediately offered to withdraw it.”

Mr Mizikovsky says at par 34 of his affidavit:

“At the time the Bern Plan was prepared, I was aware of Tamawood’s competitors plans, including the Henley Group’s ‘Baltimore’ plan. I supervised the drawing of the ‘Bern’ plan to ensure that the ‘Baltimore’ [sic, should be ‘Bern’] plan was completely different from the ‘Baltimore’.”

52 Mr Stehbens, a draftsperson with Tamawood, was asked:

“What you did was create designs which would compete directly with the Henley designs, and you kept the first letter or two of the name the same, didn’t you?

to which he agreed.

53 Mr Mizikovsky admits that from mid-1987, Tamawood was running a radio advertising campaign which concerned Henley, and he agreed that what was said on the radio was:

“Cut Price Homes are better value by design. Save up to $5500 off same size Henley homes. Cut price Homes don’t spend millions on display homes and have less overheads, so look at display homes then call Cut Price Homes, a division of Tamawood.”

54 I accept that the creation of the Bern was part of a systematic attempt by Tamawood to compete with Henley, by taking and looking at the range of Henley houses and then trying to create a design as close as possible to that Henley design, but hopefully, without infringing Henley’s copyright in the plan. It was because of the closeness of design, in my opinion, that Tamawood sent copies of its competing designs to Henley. Here the causal connection is plain and, while there are differences, the Bern and the Baltimore are strikingly similar, and so much I find was intended. I have been assisted in reaching that conclusion by the evidence of Mr Wilde, an architect and principal of Goodsir Baker Wilde, an architectural practice in Brisbane who reported:

“Whilst the common features of the subject designs are not in themselves unique, it is the combination of the same features that leads me to form the view that there is an overall striking resemblance of the plans and elevation.”

55 In considering whether a substantial part of the plans have been taken by the respondent, the quality rather than the quantity of what has been taken from the designs is important, and the overall impact of the designs rather than specific individual or minor features is what is important. It is the overall design and combination of features which leads to the conclusion that, notwithstanding the differences which exist, the Bern plan is a reproduction of at least a substantial part of Henley’s Baltimore plan.

56 Tamawood and Mr Mizikovsky infringed the copyright of the Baltimore plans and the Baltimore house by the production of the Bern plans.

57 As to that part of the cross-claim which alleges contravention of s 52 of the Trade Practices Act, representation (iv) is no longer pressed. In the light of my earlier findings, the first three representations do not constitute misleading or deceptive conduct within s 52 of the Trade Practices Act. The evidence shows that the fifth representation seems to have been a representation, not by Henley, but by a Swiss gentleman who spoke to Mr Ken Lewis, an employee of Henley. That gentleman had suggested, in effect, that if a customer of the Cut Price Homes division wanted to have anything other than white laminate on his or her bathroom vanities, then an additional amount would be charged to that customer. The evidence does not falsify this comment, and in any event, the representation was not made by or on behalf of Henley.

58 I have already rejected the allegation in the cross-claim that Henley infringed Tamawood’s copyright in the Renee plans by the Chirnside plans.

59 Finally concerning the claims of a groundless threat of legal proceedings said to be constituted by the letter of demand sent on behalf of the applicants on 24 December 1998 and the institution of the present proceedings also said to constitute groundless threats of legal proceedings, pursuant to which the respondents are entitled to declaration and damages pursuant to s 202 of the Act, those claims must fail.

60 The letter of 24 December 1999 concerns the allegation by Henley that the Gould house infringes copyright in the Chirnside plans and the Chirnside house. I have held that that infringement of copyright is made good, and consequently, the claim insofar as it is based on the letter pursuant to s 202 must fail. The claim based on the institution of the present proceedings fails because s 202 is concerned with the threats of proceedings, not the institution of proceedings.

61 I will hear the parties on the form of orders I should make to give effect to these reasons, and on costs.

I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender .

Associate:

Dated: 14 March 2003

Counsel for the Applicant:	Dr John Emmerson QC, with Mr A. Ryan

Solicitor for the Applicant:	Blake Dawson Waldron

Counsel for the Respondent:	Philip McMurdo QC, with Declan Kelly

Solicitor for the Respondent:	Mallesons Stephen Jaques

Dates of Hearing:	3-6 September, 3-5 December 2001

Date of Judgment:	14 March 2003

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