FEDERAL COURT OF AUSTRALIA

Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited [2012] FCA 779

THE COURT DIRECTS THAT:

1.    The applicants are to lodge and serve within 7 days draft minutes of order reflecting the conclusions reached in these reasons;

2.    The respondent is to lodge and serve within 14 days submissions indicating which orders, if any, it opposes and the grounds of opposition; and

3.    The applicants, if so advised, are to lodge and serve within 21 days submissions in response to the respondent’s submissions.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Introduction

1    This is a claim for damages for infringement of copyright by the applicants against the respondent under subs 115(2) of the Copyright Act 1968 (Cth) (“the Act”). The applicants claim that the respondent infringed their copyright in a questionnaire known as the School Organisational Health Questionnaire (“SOHQ”). At the trial the applicants made an election for damages rather than an account of profits. The applicants also claim from the respondent additional damages under subs 115(4) of the Act. Finally, the applicants claim a declaration of ownership of the SOHQ and an injunction restraining various acts by the respondent.

2    Insight SRC IP Holdings Pty Ltd (“Insight SRC IP Holdings”) is the first applicant and it is said by the applicants to be the owner of the copyright in the SOHQ. The company was incorporated on 30 April 2009, and Dr Peter Michael Hart is the director and major shareholder of the company. Dr Hart holds his shareholding through Hart Cultural Lodges Pty Ltd (“Hart Cultural Lodges”). Hart Cultural Lodges was incorporated on 22 May 2006 and is the trustee of Dr Hart’s family trust. That family trust is called the Hartski Holdings Trust. One of the witnesses at the trial was Dr Peter Cotton and he owns 4 of the 80 shares in Insight SRC IP Holdings. In evidence he said that he owned four units in the Insight SRC IP Holdings Unit Trust.

3    Insight SRC Pty Ltd (“Insight SRC”) is the second applicant and it is said by the applicants to be the exclusive licensee of the copyright in the SOHQ. The exclusive licensee has the same rights of action as the owner of copyright as if the licence had been an assignment (paragraph 119(a) of the Act). Insight SRC was incorporated on 6 November 1997 as Social Research Consultants Pty Ltd and, on 3 April 2000, changed its name to Insight SRC Pty Ltd. The director and major shareholder – either directly or with associated entities – is Dr Hart. Dr Cotton owns the 12 A class shares in the company and 5 of the 100 ordinary shares.

4    The respondent is the Australian Council for Education Research Limited (“ACER”). It is a not-for-profit company.

5    When the applicants commenced their proceeding they also made a claim against Independent Schools Victoria Inc (“ISV”), which, on their case, also infringed the copyright in the SOHQ. They settled their claim against ISV on 4 August 2011. Nevertheless, because of the way in which the applicants formulated their claim for damages against ACER, ISV featured prominently in the evidence. The terms of settlement between the applicants and ISV were put in evidence. For reasons I will give, the applicants are not entitled to an award of general damages against ACER. Therefore, the amount ISV agreed to pay the applicants under the terms of settlement with them is not relevant to the relief I will grant to the applicants. In any event, the amount ISV agreed to pay the applicants suggests to me that it agreed to pay the applicants an amount for their costs.

6    The SOHQ is a questionnaire which consists of 57 questions arranged under 12 headings or, as they were referred to in the evidence, modules. Other words used in the evidence or documents for questions were items or measures. The applicants’ case is that the SOHQ was part of an article entitled “Development of the School Organisational Health Questionnaire: A measure for assessing morale and school organisational climate” which was published in the British Journal of Educational Psychology (2000), 70:211-228 (“British Journal Article”). Three studies were said to have been carried out for the purpose of developing the questionnaire. The applicants accept that these studies were carried out between 1990 and 1992 while Dr Hart was employed by the Ministry of Education in Victoria.

7    Between early 2006 and October 2009, ACER reproduced the SOHQ as part of a project with ISV called the Building Educational Effectiveness project or, as it was referred to in the evidence, the BEE project. Not all of the questions in the SOHQ were reproduced and provided to ISV; only 25 questions and 5 modules were reproduced. Nevertheless, it is not suggested by ACER that that did not amount to infringement of the copyright in the SOHQ.

The issues in the proceeding

8    The pleadings in the proceeding identified a number of issues. Some of those issues were no longer pressed by the end of the trial. First, there is no challenge to the subsistence of copyright in the SOHQ or to the originality of that work. Secondly, there is no dispute that Dr Hart was the first person to reduce the work to a material form, so there is no claim of joint authorship. Thirdly, claims that the University of Melbourne or the National Health and Medical Research Council owned copyright in the SOHQ were not pressed.

9    The issues that must be determined in this action are as follows. First, there is an issue as to the ownership of the SOHQ. There is no dispute that Dr Hart was the author of the SOHQ and that it was made in 1992. There is a dispute as to when it was made in 1992, namely, whether it was April 1992 as ACER contends, or August 1992 as the applicants contend. For reasons I will give, I find that the work was made in April 1992. Between May 1990 and May 1992, Dr Hart was employed by the Ministry of Education in Victoria. That section of government is now called the Department of Education and Early Childhood Development. For convenience, I will refer to it in these reasons simply as the Department. ACER claims that by reason of subs 35(6) or subs 176(2) of the Act, or both, the Crown in right of the State of Victoria owns the copyright in the SOHQ and it has never been owned by Dr Hart. For reasons which will become clear, on the applicants’ case subs 35(3) and 179 of the Act are also relevant to the issue of ownership.

10    Secondly, there is an issue as to the applicants’ title to sue ACER in this proceeding. The applicants’ case is that Dr Hart was the owner of the copyright in the SOHQ in 1992. However, Dr Hart is not an applicant in this proceeding. The applicants’ case is that, by a number of deeds executed in 2009 and in 2011, copyright in the SOHQ was assigned to Insight SRC IP Holdings and then licensed on an exclusive basis by that entity to Insight SRC. However, it is the assignment of existing rights of action which are important in this case because, on the evidence, the infringing conduct commenced in 2006 and ceased in October 2009. ACER claims that the various deeds were not effective to transfer existing rights of action to either of the applicants.

11    Thirdly, there is an issue as to whether ACER has made out the defence in subs 115(3) of the Act.

12    Finally, and assuming the above issues are resolved in the applicants’ favour, there are two issues as to damages. As far as general damages are concerned, the applicants claim damages on the basis that they would have secured contracts with ISV, but for ACER’s infringement of copyright in the SOHQ, and that their damages are their loss of profits on those contracts. That a copyright owner or exclusive licensee can claim damages on that basis is clear: TS & B Retail Systems Pty Ltd v 3Fold Resources Pty Ltd (No 3) (2007) 158 FCR 444 at 495-496 [203]-[208] per Finkelstein J (“TS & B Retail”). However, ACER claims that in fact it made no profits on its contracts with ISV and the applicants have not proved any loss or damage. As far as additional damages are concerned, the relevant considerations are set out in subs 115(4) of the Act. The applicants claim that the infringements in this case were flagrant and that a substantial award for additional damages is appropriate. The employee of ACER who was in charge of the BEE project was Dr Kenneth Rowe. The evidence established that Dr Rowe was a highly qualified and respected researcher, but his conduct was severely criticised by the applicants. Sadly, Dr Rowe was killed in the Victorian bushfires in early 2009.

The witnesses

13    Before the trial, orders were made requiring the parties to reduce the evidence-in-chief of their witnesses into affidavit form and that was done. Their evidence-in-chief was adduced by tendering their affidavits and, on occasions, supplemented by a small number of questions.

14    The principal witness for the applicants was Dr Hart. He was subject to a lengthy and searching cross-examination. Generally speaking, he was an honest witness. He was required to recall events some 20 years before he gave evidence and I do not accept his evidence in all respects. Furthermore, Dr Hart gave evidence relevant to the applicants’ claim for general damages. That was done in a document which I will call “document no. 35”. For reasons I will give, I think that document is flawed and I do not accept it.

15    The applicants called three witnesses who had been subpoenaed to appear and who had not prepared affidavits. They were Dr Sarah Glover and Mr Stephen Fraser who are both employees of the Department, and Dr Mary Oski, who is an employee of the Catholic Education Office, Melbourne (“CEOM”). I have no reason to doubt the honesty of these witnesses.

16    The applicants also called as witnesses Dr Cotton, who is an organisational and clinical psychologist, Mr Roger Dingle, psychologist, and Mr Wayne Griffiths, who described himself as a retired consultant. Of these witnesses, Dr Griffiths gave his evidence by way of affidavit and he was not required for cross-examination. In 2003 and 2004 he was involved in three contracts with Insight SRC through his consulting company, Bill Griffiths Consulting Pty Ltd. Subject to what I say below (at [85]) I accept Mr Griffiths’ evidence. As I have said, Dr Cotton has a financial interest in the applicants. He said that he did not take part in the daily activities of Insight SRC, although he became involved in projects as requested. His evidence was largely expert evidence about the value of the SOHQ and the likely time and effort involved in its development. In assessing his evidence, I have taken into account his interest in and involvement with the applicants. Mr Dingle said that he was an associate consultant with Insight SRC. He worked with the SOHQ and he gave evidence that he received consultancy fees in the order of 54 per cent of his income from Insight SRC in the years 2009 and 2010. I have taken these matters into account in assessing his evidence. I formed the view that Mr Dingle was an honest witness and I accept his evidence.

17    The respondent called as witnesses Mr Wayne Dawes, who is company secretary and director of corporate services of ACER, Dr Andreas Stephanou, who is a psychometrician employed by ACER, Dr Peter Cuttance, who is executive director of an organisation called the Research Australia Development and Innovation Institute, and Dr Gerard Calnin, who was a part-time consultant and then Director, Policy and Research of ISV from May 2005 to September 2009. These witnesses were honest witnesses. For reasons I will give, I do not accept some of the expert opinions expressed by Drs Stephanou and Cuttance. In addition to these witnesses, ACER tendered an affidavit of a Mr Stuart Tremlow Hughes. He was not required for cross-examination. He is the senior librarian employed by ACER and his evidence establishes that the Fremantle paper (see [26] below) was part of ACER’s library collection from January 1997 and has been available for members of the public to read and review since then.

Ownership of the SOHQ

18    As I have said, the SOHQ consists of 12 modules and each module is directed to a different aspect of school organisational health and consists of between four and seven questions. The applicants allege that each module is discrete and can be administered individually or in combination with other modules. They claim that, when administering the questionnaire or any modules of the questionnaire, the questions within each module are administered in random sequence to avoid patterned responses.

19    The applicants plead that Dr Hart developed, authored and created the SOHQ between “about 1992 and 1999”. Their case at trial was unequivocally that Dr Hart made the SOHQ in late 1992 and, more particularly, in August 1992. ACER’s case at trial was that Dr Hart made the SOHQ in April 1992 if not before that date. The significance of the point in terms of whether Dr Hart or the Department owned the copyright in the SOHQ is that Dr Hart was employed by the Department between May 1990 and May 1992.

Key documents

20    In terms of determining when the SOHQ was made and the relationship between its development and Dr Hart’s employment by the Department, it is convenient to begin by describing certain key documents put in evidence by the applicants.

21    The first document is a document entitled “School Organisational Health Questionnaire”, “Manual”. The authors of the document are said to be Dr Hart and Messrs Michael Conn and Nick Carter of the Department of School Education, Victoria. The date of the document is April 1992. On the top of the title page is a reference to the “OHAQ” and a note to the following effect: DRAFT 2 – Not to be distributed or referenced without the authors’ permission (18/5/92).

22    The introduction to the manual contains the following statements:

The School Organisational Health Questionnaire provides a reliable and valid measure of 12 different aspects of school organisational health. The questionnaire was developed in order to meet the following goals:

(a)    identify the determinants of teacher morale;

(b)    assess a school’s organisational health, in a manner that enables teachers to readily interpret and use the assessment results for school improvement purposes; and,

(c)    evaluate organisational health programmes.

The questionnaire was not designed for use as a diagnostic instrument to assess the work-related attitudes and perceptions of individual teachers.

1520 teachers from 18 primary and 26 secondary schools (both country and metropolitan) contributed to the development of the questionnaire. A large number of survey items were tested, and resulted in a questionnaire with good psychometric properties which provides a practical insight into a school’s organisational health.

The questionnaire is divided into two parts: (a) Actual; and (b) Preferred. The items in both parts of the survey are essentially the same. The actual subtest asked teachers to indicate the extent to which different aspects of organisational health actually exist in their school. The preferred section asked teachers to indicate the extent to which different aspects of organisational health should exist in their preferred (ideal) school.

23    The SOHQ is an appendix to the manual. The “Actual” part consists of 54 questions divided into 12 modules. The “Preferred” part of the questionnaire consists of 56 questions divided into 12 modules.

24    The applicants do not dispute that the SOHQ was based on research data collected from 1,520 respondents in 1991 and 1992. They also do not dispute that one of the studies carried out (Study 3) was an evaluation of the 57 items that subsequently appeared in the British Journal Article. The applicants’ case is that Dr Hart did not carry out an analysis of the material he had until after May 1992 and, as I understood it, Dr Hart made the SOHQ in about August 1992 when he removed the “Preferred” part of the SOHQ as set out in the manual.

25    In November 1993, the National Conference of the Australian Association for Research in Education was held in Fremantle, Western Australia. Dr Hart presented three papers at the conference. The titles of those papers were as follows:

1.    “Evaluation of the Whole School Approach to Discipline Programme: Conventional Wisdom is a Poor Predictor of the Relationship Between Discipline Policy, Student Behaviour and Teacher Stress”. Dr Hart and Professor Wearing and Mr Conn.

2.    “Understanding Teacher Quality of Work Life: A Dynamic Model of Organisational Climate, Psychological Distress and Morale”. Dr Hart and Messrs Conn, Carter and Professor Wearing.

3.    “Development of the School Organisational Health Questionnaire: A Measure for Assessing Teacher Morale and School Organisational Climate”. Dr Hart and Messrs Carter, Conn, Dingle and Professor Wearing.

26    I will refer to the third paper as the Fremantle paper. The abstract for the Fremantle paper contained the following statements:

This study reports on the development of the School Organisational Health Questionnaire; a measure for assessing teacher morale and school organisational climate. As part of an organisational health programme conducted by the Victorian Department of School Education, there was a need to develop a psychometrically sound instrument that would provide the basis for organisational change and provide a means for evaluating the effectiveness of organisational development programmes. Data were provided by 1,520 Victorian teachers in 18 primary and 26 secondary schools. A series of exploratory and confirmatory factor analysis resulted in a 54 item questionnaire that measures teacher morale and 11 separate dimensions of school organisational climate: curriculum consultation, discipline policy, excessive work demands, feedback, goal congruence, participative decision making, professional development, professional interaction, student orientation, supportive leadership, and role parity.

27    Three sections in the Fremantle paper should be noted. Under the heading “Development of the School Organisational Health Questionnaire: A Measure for Assessing Teacher Morale and School Organisational Climate”, the following statements appear:

During 1991 the Victorian Department of School Education conducted several organisational development programmes that aimed to enhance teacher quality of work life (Carter, Hart and Wearing, 1993). In order to evaluate these programmes and provide participating schools with diagnostic information about their school’s organisation, we developed a questionnaire that assesses teacher morale and various dimensions of organisational climate. This paper reports three studies conducted during the development of the School Organisational Health Questionnaire.

28    Under the heading “Study 1: Initial Development of the School Organisational Health Questionnaire, Method, Participants”, the following statement appears:

The data were derived from the responses to a pretest survey used to evaluate an organisational development programme conducted by the Victorian (Australia) Department of School Education during early 1991.

29    Under the heading “Study 3 Combining Organisational and School Specific Dimensions of the School Organisational Health Questionnaire, Method, Participants”, the following statement appears:

The data was derived from responses to a pretest survey used to evaluate an organisational development program conducted by the Victorian (Australia) Department of School Education during late 1991.

30    In June 1996, Dr Hart and Professor Wearing of the School of Behavioural Science at the University of Melbourne, published a report entitled as follows:

School Organisational Health Questionnaire Consultancy Project

A project to validate and norm the School Organisational Health Questionnaire for use in the Department of Education.

31    In the Overview in this report, the following statements appear:

The primary goal of this consultancy project was to validate and norm the final version of the School Organisational Health Questionnaire for use within the Department of Education. The School Organisational Health Questionnaire is a self report diagnostic tool that can be used to assess the organisational factors that determine employees’ level of occupational stress and morale. A second goal of the project was to validate a theoretical model of organisational health that had previously been developed by the consultants.

32    The SOHQ which is part of the report consists of 67 questions. There is a statement in the report that it is subject to copyright and that it could not be used without permission of the copyright holder. The following statements also appear:

Copyright

•    The School Organisational Health Questionnaire is subject to copyright. No part of this questionnaire, including any individual questionnaire items, may [sic] reproduced or transmitted in any form or any means, electronic or mechanical, including photocopying, for any purpose whatsoever, without the prior permission of the copyright holder.

•    For further information about copyright and the use of the School Organisational Health Questionnaire please contact Dr Peter M Hart, Director, Social Research Consultants, PO Box 712, Eltham, Victoria, 3095, on: …

33    The British Journal Article referred to three studies and identified them as “The Initial Development of the School Organisational Health Questionnaire (Study 1)”, “School specific dimensions of the School Organisational Health Questionnaire (Study 2)” and “Combining organisational and school specific dimensions of the School Organisational Health Questionnaire (Study 3)”. In the article, there is a statement to the effect that the three studies were conducted with the aim of developing a psychometrically sound questionnaire that could be used to assess teacher morale and various dimensions of school organisational climate. The sample is described in the following terms:

A total of 1,520 teachers from 18 primary and 26 secondary schools in the Australian State of Victoria agreed to participate in three separate studies (N = 615, 342 and 563 in studies 1, 2 and 3 respectively) that were used to develop the questionnaire. The demographic profile of the teachers was similar to that found in the department as a whole.

34    The conclusions in the British Journal Article were expressed in the following terms:

The three studies resulted in the 54 item School Organisational Health Questionnaire that measures teacher morale and 11 separate dimensions of school organisational climate: appraisal and recognition, curriculum coordination, effective discipline policy, excessive work demands, goal congruence, participative decision making, professional growth, professional interaction, role clarity, student orientation, and supportive leadership.

Conclusions on when the SOHQ was made

35    I find that the SOHQ was made by Dr Hart in April 1992 when the manual was prepared. The fact that the SOHQ was subject to further validation after that date does not detract from that conclusion. Nor do I think the fact that the “Preferred” part was excised in August 1992 affects that conclusion. There was no necessary link between the “Actual” part and the “Preferred” part.

36    ACER submitted that I could find that the SOHQ was made before April 1992. It referred to the earliest version of the SOHQ found by Dr Hart (April 1991). It also referred to two Teacher Questionnaires dated 1991 and a Teacher Questionnaire dated 1992. It also referred to the questionnaire that was used, or must have been used, in the course of Study 3. I do not think the evidence is clear enough to enable me to make a finding that the SOHQ was made before April 1992. Furthermore, I accept Dr Hart’s evidence that presentation and arrangement are important aspects of the SOHQ.

Dr Hart’s employment by the Department

37    Dr Hart made the SOHQ in April 1992 and that was during the period of his employment by the Department.

38    At all relevant times, subs 35(6) of the Act was in the following terms:

Where a literary, dramatic or artistic work to which neither of the last two preceding subsections applies, or a musical work, is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work by virtue of this Part.

Subsection 35(3) of the Act must also be noted. At all relevant times it was in the following terms:

The operation of any of the next three succeeding subsections in relation to copyright in a particular work may be excluded or modified by agreement.

At all relevant times, subs 176(2) of the Act was in the following terms:

The Commonwealth or a State is, subject to this Part and to Part X, the owner of the copyright in an original literary, dramatic, musical or artistic work made by, or under the direction or control of, the Commonwealth or the State, as the case may be.

Section 179 of the Act must also be noted. At all relevant times it was in the following terms:

The last three preceding sections have effect subject to any agreement made by, or on behalf of, the Commonwealth or a State with the author of the work or with the maker of the sound recording or cinematograph film, as the case may be, by which it is agreed that the copyright in the work, recording or film is to be vested in the author or maker or in another person specified in the agreement.

39    There is no dispute that the Department was part of the Crown in right of the State of Victoria.

40    Subsection 35(6) uses the words “in pursuance of”. A related expression, “Pursuant to” is defined in Shorter Oxford English Dictionary to mean, inter alia, “following upon”, “consequent upon and conformable to” and “in accordance with”. Clearly, one of the first things which must be done in considering the application of the subsection is to identify the terms of the contract of employment. The terms may be written or oral, or partly written and partly oral at the commencement of the contract. ACER submitted that it was necessary to bear in mind that the Court will not construe contracts of employment in a narrow way: Westin v Union Des Assurances De Paris (1996) 88 IR 259; Whittaker v Unisys Australia Pty Ltd (2010) 26 VR 668, and that a new contract of employment may come into existence if there is an agreed significant or profound change in an employee’s duties: Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 142 ALR 99; Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567.

41    Subsection 35(3) provides that the matter which may be excluded or modified by agreement is the “operation” of, in this case, subs 35(6). In other words, the parties may agree that subs 35(6) is not to operate according to its terms. Perhaps the most likely agreement is that the author will be the owner, or at least part owner, of the copyright. This would be an agreement as to the operation of the subs 35(6), not an assignment of copyright which must be in writing by virtue of subs 196(3) of the Act. An agreement for the purposes of subs 35(3) of the Act need not be in writing.

42    The history of subs 176(2) was considered by Finkelstein J in Copyright Agency Ltd v State of New South Wales. It is clear, I think, that both subs 176(2) and subs 35(6) may apply to the one factual situation. In some circumstances, subs 176(2) may have a wider operation than subs 35(6). For example, subs 176(2) may apply to a contractor. On the other hand, a work may be made in pursuance of the terms of a contract with the Crown within subs 35(6), but not be made under the direction or control of the Crown within subs 176(2).

43    The important words in subs 176(2) are, “by, or under the direction or control of” the State. The meaning of that expression was considered by the Full Court of this Court in Copyright Agency Ltd v New South Wales (2007) 159 FCR 213. Justice Lindgren agreed with the reasons of Justice Emmett. His Honour said (at 238 [122]):

‘By’ is concerned with those circumstances where a servant or agent of the Crown brings the work into existence for and on behalf of the Crown. ‘Direction’ and ‘control’ are not concerned with the situation where the work is made by the Crown but with situations where the person making the work is subject to either the direction or control of the Crown as to how the work is to be made. In the copyright context, that may mean how the work is to be expressed in a material form.

His Honour considered the meaning of “direction” and of “control” and then said:

Thus, when the provisions refer to a work being made under the direction or control of the Crown, in contrast to being made by the Crown, the provisions must involve the concept of the Crown bringing about the making of the work. It does not extend to the Crown laying down how a work is to be made, if a citizen chooses to make a work, without having any obligation to do so.

The question is whether the Crown is in a position to determine whether or not a work will be made, rather than simply determining that, if it is to be made at all, it will be made in a particular way or in accordance with particular specifications. The phrase ‘under the direction or control’ does not include a factual situation where the Crown is able, de facto, to exercise direction or control because an approval or licence that is sought would not be forthcoming unless the Crown's requirements for such approval or licence are satisfied. The phrase may not extend much, if at all, beyond commission, employment and analogous situations. It may merely concentrate ownership in the Crown to avoid the need to identify particular authors, employees or contracting parties.

44    Justice Finkelstein said (at 248-249):

It seems unlikely that Parliament had in mind relationships of principal and agent or master and servant when referring to works made ‘by’ the Crown. The concept of a work made ‘under the direction or control’ of the Crown is more apt to cover the activities of servants of the Crown. In my opinion a work made ‘by’ the Crown is intended to deal with those kinds of government publications where the author is not subject to the direction or control of the Crown and would include works where, at least in a legal sense, the work has no author. The best example is an Act of Parliament. First of all, it could not be said that when enacting legislation the Parliament is acting under the direction or control of the Crown. Secondly, it is not so easy, in a legal sense, to identify the author of an Act of Parliament. Yet it makes sense to treat legislation as having been made ‘by’ the Crown. Certainly Long Innes CJ was of this view: see Attorney General v Butterworth 38 SR (NSW) at 259.

I also incline to the view that a judge's reasons for judgment should be attributed to the Crown. I am familiar with some of the academic writings on the topic of copyright in judgments. Most writers consider this issue by enquiring whether it can possibly be said that a judge is acting under the direction or control of the Crown. If I might say so, that approach may be misconceived. It is simply beyond argument that a judge does not act under the direction or control of the Crown. On the other hand, if the question is: ‘Whether, as a matter of the construction of s 176, a judgment should be attributed to the Crown as a work made by the Crown?’ I see no reason why that should not carry an affirmative answer.

There is probably a degree of overlap in the case of works made ‘under the direction of’ or ‘under the control of’ the Crown. Broadly speaking, however, where the Crown has power to require a work to come into existence, the work is made under the ‘direction’ of the Crown. If the Crown has dominion over the execution of the work then it is made under its ‘control’. The assumption that underlies each concept (direction and control) is the existence of a relationship between the Crown and the author that authorises the Crown to give the direction or exercise the control as the case may be. That authority may be found in statute, including regulations made under a statute, contract or elsewhere. But, whatever its source may be, the authority must exist.

45    Section 179 is quite specific in its terms. An agreement to fall within the terms of the section must be about the “vesting” of copyright. Again, I reject any suggestion that an agreement within s 179 is governed by the assignment provisions in the Act and, in particular, that it must be in writing by reason of subs 196(3) of the Act.

46    Dr Hart worked as a policeman for Victoria Police between February 1977 and April 1990. During that time he undertook further studies. He completed a Bachelor of Arts Degree at the Swinburne Institute of Technology between 1983 and 1987. The course contained major studies in psychology and criminal justice administration. Dr Hart completed a Master of Arts preliminary programme at the University of Melbourne between 1 January 1988 and 31 December 1989. The course content was psychology and the title of his thesis was “Stress Measurement and Perceived Quality of Life Amongst Police Officers”. His supervisors were Professor Wearing and Dr Headey.

47    As I have said, in May 1990, Dr Hart commenced work for the Department and he left the Department in May 1992. On 1 January 1990, Dr Hart commenced a programme for a Doctorate of Philosophy and he completed the programme and was awarded a PhD in December 1996. He undertook the PhD part-time between 1 January 1990 and 1 May 1992 and full-time from 2 May 1992 to 31 December 1994. The title of his thesis was “A Longitudinal Study of Police Stress” and his supervisors were the same academics who had supervised his Master of Arts preliminary programme.

48    On 4 April 1990, Mr Chris Bain, described as “the Manager, Workcare Policy Unit” of the Department, wrote to Dr Hart offering him a position with the Department described as “Evaluator: Whole School Approach Program, Workcare Preventative Initiatives”. The position was said to be a temporary exempt position for 12 months on a full-time basis. It was said to incorporate a .5 time allocation to evaluate the “Whole School Approach” and a .5 allocation to evaluate other Workcare initiatives. The position was at ADM 6 level and the holder of the position reported to Paul O’Halloran, who was described as the “Senior Consultant, Occupational Health and Safety”.

49    Dr Hart decided to accept the offer made to him. He signed and dated a letter dated 4 May 1990 sent to him by the Department. In that letter, the Department said it was pleased to offer Dr Hart temporary employment in the Workcare Policy Unit. The Department advised Dr Hart that he had been selected for employment as an Administrative Officer Grade 6 from 30 April 1990 to 30 April 1991.

50    The next written document concerning Dr Hart’s employment was a letter from the Department dealing with the extension of Dr Hart’s temporary employment. It was signed by Dr Hart on 31 July 1991 and it extended Dr Hart’s employment as Administrative Officer, ADM-6 from 1 May 1991 to 31 December 1991.

51    Dr Hart’s employment was again extended after 31 December 1991. There was a memorandum from Mr O’Halloran to a Mr Geoff May dealing with the continuation of Dr Hart’s position. It is dated 15 January 1992. It deals with the extension of Dr Hart’s employment and a handwritten note of Mr May on the memorandum refers to a recommendation that Dr Hart be kept on until 30 June 1992.

In order to complete a number of evaluations relating to the work he has been involved with:

•    evaluation of WSAD

•     "      of staff development programs etc

52    One of the people Dr Hart worked with at the Department during his time there was Mr Michael Conn. Mr Conn died some years ago. He was a psychologist. His precise position in the hierarchy of the Department was not established by the evidence. He was senior to Dr Hart. Dr Hart described Mr Conn as his immediate superior and a senior organisational health consultant. He occupied a level between Mr Bain (see [48] above) and himself. Dr Hart referred to Mr Conn as responsible for the design and implementation of school programmes. In addition, Mr Conn was Dr Hart’s supervisor in relation to his work experience as a psychologist and for the purpose of his application for membership of the Australian Psychological Society Limited (“APS”). In signed supervision notes (which are part of the application), Mr Conn described himself as a senior organisational health consultant, Workforce Management Unit, Directorate of School Education. He said that although he did not have line management for Dr Hart, he did have professional and supervisory responsibility for his work. Mr Dingle, whose evidence I refer to in greater detail below, said that Mr Conn was a senior manager at WorkCover Policy Unit. The problem that Mr Conn, Dr Hart and others were dealing with was teacher stress, and the aim was to identify the causes of it and to deal with those causes.

53    Dr Hart said that he had two “breakthrough” ideas. The first, which was “established” when completing his Master of Arts preliminary research, called into question the view that some jobs were inherently stressful because of the nature of the work being performed. The second, reached some time in 1990 or 1991, raised a concern that the focus of the programmes was on psychological distress (that is, negative emotions) and did not assess morale (that is, positive emotions).

54    The Whole School Approach referred to in the documents relating to Dr Hart’s contract of employment was the existing approach of the Department and it was designed to address the problems of teacher stress and resulting Workcare claims by teachers. It had its own survey tool which was entitled -

Whole School Approach

To

Student Discipline and Welfare

1990-1991

Teacher Questionnaire

Evaluation

55    Dr Hart said that his two breakthrough ideas were linked to the work that he was doing on his PhD. He put into evidence a statement of the PhD research problem. It is apparent from that statement and an article he co-authored with Mr Conn that he believed that the tendency for stress researchers to focus exclusively on negative experiences was inappropriate. He held that opinion because of the complex relationship that existed between what he described as positive and negative experiences in determining psychological health.

56    In the statement, he said that the Victoria Police Department provided an ideal setting for developing an integrated approach to the study of dynamic stress processes. He also said the following:

The research is based on social survey methodology, and will employ various cross-sectional and longitudinal samples drawn from Victoria Police, teachers, council workers and undergraduate psychology students. This will provide a unique opportunity to gain a better understanding of stress processes, given that the research will primarily be conducted in a work setting with two occupational groups (police and teachers) that reputedly experience high degrees of stress (Sigler and Wilson, 1988).

57    As it happened, Dr Hart’s thesis concentrated on stress in the police force and did not make reference to the SOHQ.

58    The difference between the existing approach and Dr Hart’s approach is illustrated by reference to the article Dr Hart co-authored with Mr Conn (“Stress, Morale and Teachers”) and published in a publication called the Education Quarterly. Relevant passages are as follows:

It is commonly believed that stress and morale are like opposite ends of a see-saw: a school experiences either high stress and low morale, low stress and high morale, or something in between. This belief does not in fact explain the relationship between stress and morale, as it is also possible to identify schools which do not fit this pattern: those with high stress and high morale, or low stress and low morale.

…

Unfortunately much of the research and work done to improve school organisations has focused almost exclusively on understanding or reducing teacher stress. For example, in 1988 the Department of School Education commissioned the University of Melbourne to investigate teacher stress in the hope of identifying factors which contributed to the high incidence of stress-related WorkCare claims. The result was the report, Teacher Stress in Victoria. This provided an excellent insight into the negative aspects of school organisations which cause teacher stress, but said nothing about the positive factors which contribute to effective schools or teacher morale. Another example is the introduction of the Whole School Approach to Discipline and Student Welfare (WSADSW) program. This program received substantial funding in the belief that it would reduce stress and resulting WorkCare claims among teachers. While it achieved these aims, both empirical evaluation and anecdotal feedback from participants suggest strongly that the program is more effective in enhancing teacher morale than in reducing stress.

Although these initiatives have been extremely worthwhile, they stem from an emphasis on teacher stress and recognise only one part of a much broader picture. In EQ 2 Dr Peter Hill rightly criticised those who focus solely on stress. He argued for a change in orientation, commenting that the pursuit of teacher quality would proceed on ‘best guesses’ unless research began to identify the determinants of teacher morale and effective schools.

During the past eighteen months, the Workforce Management Section, in conjunction with Employee Services Units and School Support Centres, has undertaken a comprehensive program to establish the determinants of teacher stress and morale. Questionnaires were completed by 1 520 teachers from 18 primary and 26 secondary schools (country and metropolitan), as part of their contribution to the evaluation of different organisational health strategies such as WSADSW, staff welfare and staff development programs. From the data, a range of organisational health models which show the relationship between different organisational factors and a teacher’s quality of work life have been developed.

59    Dr Hart pursued his theories whilst working for the Department. He collected data from the surveys administered by the Department and, according to his evidence, used them for the purposes of his PhD. He formulated questions having regard to the data, collected further data and then reformulated the questions. He discussed his conclusions with his colleagues at work and asked for their suggestions. He created a large pool of questions with the assistance of his colleagues. It appears that there was a gradual shift in thinking as Dr Hart’s ideas gained traction within the Department.

60    Dr Hart said in cross-examination that he wrote the questions comprising the SOHQ outside of his working hours with the Department.

61    Mr Dingle’s evidence, which I accept, largely supports Dr Hart’s evidence. Mr Dingle is a qualified psychologist who works in private practice. However, he began his working life as a civil engineer, worked as a teacher and then worked as a school welfare co-ordinator. He was familiar with the Whole School Approach programme, which he described as a major government initiative with a high public profile. He said that the government of Victoria allocated more than $2 million to tackle the problems of stress and other safety issues in Victorian schools. In 1989, Mr Dingle began work for the Department of Education in Victoria as an employee assistance consultant. After about a year, he became an organisational health consultant, and after about three years in that position he also became the coordinator of the employee services unit for the region.

62    Mr Dingle described the commonly held view at the time that student behaviour led to teacher stress, and that improving student behaviour would ultimately lead to an improvement in student learning. He knew Mr Conn who was a psychologist and senior manager at the Workcare Policy Unit. Mr Dingle said that Dr Hart introduced new ideas into the Department. In broad terms, his ideas were to focus on positive factors such as morale, rather than the negative factors, such as stress, and he introduced people to the idea of organisational health. As a result of Dr Hart’s ideas, new programmes were developed such as staff development, staff welfare and staff appraisal. Mr Dingle was one of a number of people who was involved in development of the new programmes. He was also involved in developing questions for evaluating the success of the programmes.

63    Mr Dingle described the work that he and others did as developing draft questions and survey process skills, distributing and collecting surveys from participating teachers and participation in robust discussions and the provision of feedback to Dr Hart about his research. Mr Dingle said that as part of his ordinary working day there would be group discussions about the questions that ought to form part of the teacher survey. He described the work as “grunt” work and he said that the questionnaire and underlying research was entirely Dr Hart’s work. He said that “the ideas and the creativity and form and content of the questionnaire” came only from Dr Hart. Dr Hart decided which questions were included and which were excluded. His observations were that Dr Hart proceeded as he saw fit and he was not directed or controlled by anyone in the Department in terms of the question he prepared.

64    In terms of the applicants’ case of an agreement with Mr Conn (addressed below at [74] and following), Mr Dingle had conversations with Mr Conn during his final illness when Mr Conn told him that he had supported Dr Hart using Department data for his PhD studies, and in fact he actively encouraged him to do it. Mr Conn was proud “that he was able to convince Peter to do so much extra work outside his job requirements”.

65    This then is the broad context in which the issue of ownership must be addressed.

66    ACER pointed to material which suggested that the development and creation of the SOHQ was a part, if not a central part, of Dr Hart’s employment by the Department.

67    First, there were various versions of Dr Hart’s curriculum vitae or resume. For example, in June 1993, when Dr Hart applied to become a full member of the APS, he included a resume in his application. The resume contained a summary of his employment history. In listing his major responsibilities with the Department, he identified the following responsibility:

The development of valid measures for assessing the organisational determinants of both stress and morale.

68    In listing his major achievements during his time with the Department he identified the following achievement:

Development and validation of School Organisational Health Questionnaire, which assesses teacher morale and 11 different aspects of organisational climate.

69    Similar, although not identical statements, appear in the curriculum vitae Dr Hart prepared in October 2011.

70    In an application for a public health research scholarship dated November 1991, Dr Hart said, among other things:

I am conducting three major research projects as part of my work with the Ministry of Education. The projects were designed to:

(a)    evaluate, arrange a statewide organisational health intervention;

(b)    to develop and validate a measure for assessing the organisational determinants of stress and morale among teachers; and

(c)    to develop conceptual models of organisational health.

The main features of this research work include the following …

•    development of valid measures for assessing the organisational determinants of both stress and morale

71    Secondly, there were statements made by Mr Conn in his signed supervision notes concerning Dr Hart (see [52] above). In those notes Mr Conn said, among other things, that Dr Hart’s formal areas of responsibility included the development of valid measures for assessing the organisational determinants of both stress and morale and that Dr Hart had shown outstanding skills and knowledge in a number of areas including, “Questionnaires development to measure aspects of an organisation”.

72    Thirdly, there were the statements in the Fremantle paper referred to above (at [26]-[29]).

73    Fourthly, ACER pointed to an agreement between the Department and the University of Melbourne executed on 7 March 1995. In broad terms, the agreement provided for the University to carry out a research project in relation to the SOHQ. The SOHQ was defined in the agreement as the “54 item questionnaire … that was developed by Peter M Hart and his colleagues”. The purpose of the research work, again in broad terms, appears to have been to further validate the SOHQ. Clauses 10 and 11 deal with ownership of certain documents, but not the SOHQ. Both the Registrar of the University and Dr Hart are named in the agreement as parties who are to receive notices and documents under the agreement. Dr Hart said that he pressed for recognition of his ownership of the SOHQ, but that did not eventuate. The research project led to the publication, in June 1996, of the report by Dr Hart and Professor Wearing referred to above (at [30]). As I have said, the report contained a claim for copyright in the SOHQ by Dr Hart. I think the fact of the agreement is somewhat neutral on the topic of ownership.

The agreement with Mr Conn and events and conversations after May 1992

74    Dr Hart gave evidence that during his employment by the Department he had a conversation with Mr Conn. The evidence of when this conversation took place – whether it was the second half of 1990 or the first half of 1991 – and whether it was one conversation or a number of conversations is unclear. Furthermore, Dr Hart could not remember the terms of the conversation in other than fairly general terms. In that respect, it must be remembered that it took place approximately 20 years before he gave evidence. Dr Hart said, and I accept, that Mr Conn was aware of the work Dr Hart was doing in connection with his Doctorate of Philosophy programme.

75    Dr Hart said that Mr Conn agreed that the data collected by Dr Hart in the course of his employment by the Department could be used by him for the purposes of his study and research programme. I am satisfied on the evidence that at least this much was agreed and I did not understand ACER to contend to the contrary. Dr Hart went on to say that it was also agreed that Dr Hart would work to develop a questionnaire, or continue to develop a questionnaire, and that in return for the Department’s agreement that Dr Hart could use data for his own purposes, the Department could use any questionnaire Dr Hart developed. This resulted in what at one point Dr Hart described as a “win-win” situation.

76    The use of data from the administration of a questionnaire and the questions comprising the questionnaire are linked. The utility of the data will depend on the effectiveness of the questions and the data itself may be used to formulate more effective questions.

77    As I have said, there are a number of frailties in the evidence. The conversation was a long time ago and Dr Hart’s recollection was not strong. The agreement was not reduced to writing and I heard only Dr Hart’s version of the conversation. Nevertheless, I accept Dr Hart’s evidence that there was an agreement along the lines deposed to by him.

78    Before expressing my conclusions about the ownership issue, I must identify evidence of events and conversations after May 1992 said to be relevant to the issue.

79    In approximately 1994 or 1995, Dr Hart and Mr Conn agreed that the Department could use the SOHQ in government schools free of charge. There was no written agreement at that time. Between the time of that agreement and about 1999, the Department used a shortened version of the SOHQ. Thereafter it used the full version. The shortened version consisted of 25 questions and 5 modules and was the version used by ACER and Dr Rowe in connection with the BEE Project.

80    The Department entered into a written licence agreement with Insight SRC in 2004. The licence was an exclusive licence to use the SOHQ within Victoria and only to employees of the Department. The Department agreed to provide data to Dr Hart. The term of the licence was a period of three years.

81    A further written agreement was entered into in 2007. The Agreement provided for Insight SRC to license survey tools including the SOHQ to the State of Victoria. The Departmental Briefing Note provided with the agreement gives an adequate explanation of the relevant matters. It provided as follows:

Purpose

1.    To obtain your signature on the attached Deed of Agreement between the Department and Insight SRC Pty Ltd allowing the Department to continue to using school staff survey tools (including the School Organisational Health Questionnaire).

Background

2.    Since 1996, as part of the School Accountability Programme, schools and the Department have been using the staff survey (owned by Insight SRC) to monitor staff opinion and school effectiveness. …

4.    The current Deed of Agreement, which operated for three years, has recently expired. A new Deed of Agreement, signed by Insight SRC, is at attachment 1.

5.    The main features of the Deed remain unchanged, they are that the:

•    Office for Government School Education (corporate and regional staff) have the right to use the survey tools free of charge for schools;

•    intellectual property rights of the survey tools are the property of Insight SRC;

•    data protocols remain unchanged;

•    Department provides Insight SRC with school level staff opinion data in exchange for national and industry wide benchmark data;

…

Budget Implications

10.    The use of the survey tools will remain free of charge to schools, however, if training is required this would be at a cost to be agreed.

82    It is true that the agreements referred to above were with Insight SRC. It is also true, as ACER pointed out and, for reasons set out below, I find, Dr Hart and not Insight SRC was the owner of the copyright in the SOHQ at the time of these agreements. However, to my mind this does not detract from the significance of these agreements involving, as they do, Dr Hart and interests associated with him.

83    On 14 May 2010, Dr Sue Thomson, principal research fellow of ACER made an application to Insight SRC to use certain surveys held by it under exclusive licence. The application form refers to Insight SRC as the exclusive licensee of the SOHQ.

84    Mr William Griffiths is a qualified teacher and he was employed by the Department from 1968 until November 2000. Between 1988 and 1992 he was the Assistant General Manager, School Programs (Curriculum) Division. Between late 1992 or 1993 and 1998, he was Assistant General Manager of a new section of the Department called the Office of Review. Mr Conn was employed in that section. Mr Griffiths outlined the shift from reviewing schools through the visits of school inspectors and the new approach developed by the Office of Review. He described the data sets used for school assessment, and that included survey instruments of which the most important was the SOHQ.

85    Mr Griffiths gave evidence of his understanding of the ownership of the SOHQ. I admitted the evidence but limited its use to evidence of Mr Griffiths’ understanding (Evidence Act 1995 (Cth) s 136). He said that he always understood that Dr Hart owned the copyright in the SOHQ, but that the Department was entitled to use it without charge. Dr Hart had access to the data collected by the Department for research purposes and further development of the questionnaire. No one ever challenged this arrangement. He said that he was told that the SOHQ was developed by Dr Hart as part of his PhD. On reflection, I do not think Mr Griffiths’ understanding assists me in the resolution of the ownership issue.

86    Mr Griffiths also said that Dr Rowe had been a “mid-level researcher” within the Department. At some point between 1992 or 1993 and 1998, Dr Rowe was working on secondment from the Department with Dr Peter Hill in the Centre of Applied Educational Research at the University of Melbourne.

87    Dr Sarah Glover commenced employment with the Department in 2004 and since 2007 she has been the general manager of data outcomes and evaluations. She gave evidence about the use of the SOHQ by the Department and the agreement between the Department and Insight SRC executed on 26 May 2004. Dr Glover said the Department refers any requests made of it to use the SOHQ or the data obtained from it to Insight SRC.

88    Dr Glover said that she held the view that the survey had a very strong predictive power for informing school improvement. She explained how the Department used the data obtained from the use of the survey.

89    Mr Stephen Fraser began working with the Department in May 2000. He knew Mr Conn and said that he had died in about 2003. He holds the position of manager of strategic analysis. When he first started, the Department was using the shorter version of the survey. In 2003 or 2004, the Department starting using the full version. Mr Conn told him that Dr Hart and Insight SRC owned the SOHQ. Any inquiry the Department receives about the use of the SOHQ is referred to Insight SRC. This point was also made by Dr Glover. Mr Fraser considered the SOHQ a very powerful tool when used to its full potential.

90    Dr Mary Oski is the eastern region office manager of CEOM. She has been employed by the Office since 2004. She has been involved in the use of the SOHQ. The Department made clear to her that it did not own the SOHQ when inquiries were made of the Department by CEOM.

91    The CEOM decided to use the SOHQ. It is in the middle of a 5-year contract with Insight SRC. Dr Oski said that Insight SRC’s reports of survey results were very helpful. The SOHQ is used by a large number of Catholic schools in Victoria. The fees involved are paid by the relevant Archdiocese.

Conclusions as to the ownership of the SOHQ

92    My conclusions on the issue of the ownership of the copyright in the SOHQ are as follows.

93    First, Dr Hart created or made the SOHQ in April 1992.

94    Secondly, I do not accept on the balance of probabilities that the SOHQ was made by Dr Hart outside of his working hours with the Department. Some of the questions may have been written down by Dr Hart outside of his working hours, but bearing in mind what Dr Hart was doing during his working hours with the Department, I am not satisfied that there was the neat division for which the applicants contended. I do not think Dr Hart was deliberately trying to mislead me. The relevant events happened approximately 20 years ago and I think Dr Hart has convinced himself that events happened in a certain way.

95    Thirdly, I do not think that I can draw a clear conclusion about the development of the SOHQ from the fact of Dr Hart’s studies and research for his Doctorate of Philosophy programme. The two were linked in that both involved a consideration of the measurement of organisational health and the causes of whatever conclusions were reached about that matter. At the same time that was a matter he was addressing at work and discussing with his colleagues, and, in terms of the development and use of a questionnaire, a matter about which he had reached an agreement with Mr Conn.

96    Fourthly, the written documents, such as they are, about the terms of Dr Hart’s employment suggest that the making of the SOHQ was not a term of his employment. However, that is not decisive as the statements are very general and could not exclude the possibility that the making of the SOHQ was or became a term of his employment.

97    Fifthly, there was an agreement between Dr Hart and Mr Conn that the Department could use any questionnaire developed by Dr Hart for his own purposes and, in return, Dr Hart could use data collected by the Department for the purposes of his studies and research.

98    Sixthly, in view of the agreement between Dr Hart and Mr Conn I do not think it can be said Dr Hart made the SOHQ in pursuance of the terms of his employment. He was not required to produce it; in fact, the arrangement was that he could prepare it for his own purposes, albeit, the Department could use it. That arrangement might have been a generous one from Dr Hart’s point of view, but I am satisfied that was the arrangement. I do not think there is an issue with Mr Conn’s authority. The evidence suggests that he supervised Dr Hart’s work and I think he had the right to direct him as to what was or was not part of his employment duties.

99    Seventhly, I do not think it can be said that the SOHQ was made by the Department within subs 176(2) of the Act. It was made by Dr Hart. Nor can it be said that Dr Hart made the SOHQ under the direction or control of the Department. No one directed him to make it and he did not make it under the direction or control of any other member of the Department.

100    Finally, the applicants submit that the Department has acted over many years on the basis that Dr Hart and the applicants were the owners of the copyright in the SOHQ and that the Department was not the owner. The applicants referred to authorities which have held that the subsequent conduct of parties to an agreement may be used to establish the fact of an agreement or that a particular matter was a term of an acknowledged agreement. The authorities include the following: Gangeme v Osborne [2009] VSCA 297; Ambridge Investments Pty Ltd (in liq) v Baker [2010] VSC 59; Intelmail Explorenet Pty Ltd v Vardanian (No 2) (2009) 82 IPR 281; Pegela Pty Ltd v Oates [2010] NSWCA 186; Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251. The Department’s subsequent conduct certainly supports a conclusion that it believed that Dr Hart or interests associated with him owned the copyright in the SOHQ. However, there was no express agreement in 1990 or 1991 between Dr Hart and the Department about the ownership of copyright. Furthermore, the Department’s belief may have been based on something other than an agreement between Dr Hart and Mr Conn. For example, it may have believed that the SOHQ was made after Dr Hart had left the employment of the Department. Nevertheless, this does not make the evidence of the Department’s subsequent conduct irrelevant or inadmissible. It supports the applicants’ case because it is consistent with a conclusion that by reason of an agreement or understanding between Dr Hart and a person within the Department with authority, during the former’s employment by the latter that the making of the SOHQ was not an act, duty or function required by Dr Hart’s terms of employment.

101    In conclusion, Dr Hart was the author of the SOHQ. The circumstances in which he made it did not fall within subs 35(6) or subs 176(2) of the Act. Dr Hart was the owner of the copyright in the SOHQ.

The Assignments and Licence

102    Dr Hart became the owner of the copyright in the SOHQ in April 1992. He is the managing director and major shareholder of each of the applicants. The applicants’ case is that ACER commenced their infringing conduct in early 2006. The evidence establishes that ACER ceased their infringing conduct in early October 2009, although the applicants do claim damages for the 2010 year.

103    The applicants’ case is that ownership in the copyright of the SOHQ was transferred by Dr Hart to Hart Cultural Lodges on 30 June 2009 and by Hart Cultural Lodges to Insight SRC IP Holdings on 1 October 2009. On the latter date Insight SRC IP Holdings granted an exclusive licence with respect to the copyright to Insight SRC.

104    An assignment of copyright must be in writing (subs 196(3) of the Act), as must an exclusive licence (sections 10 and 119 of the Act). An assignment of copyright does not, without more, carry with it accrued rights of action for infringement: Taypar Pty Ltd v Santic (1989) 21 FCR 485.

105    There were no written assignments or licences conferring rights on the applicants or either of them prior to 1 October 2009. As far as rights of action for infringement of copyright prior to 1 October 2009 are concerned, the applicants only have such rights if they were assigned to them by the holder of the rights at the time they accrued. However, that was not achieved by the assignments of copyright and grant of licence in 2009. If it occurred, it was by reason of the Deeds of Assignment and Deed of Exclusive Licence executed in May 2011.

106    Before addressing the effect of these agreements it is necessary to say something about how in fact the SOHQ has been used.

107    Insight SRC IP Holdings is the trustee of the Insight SRC IP Holdings Unit Trust. Insight SRC has carried on a business which has involved the use of the SOHQ and indeed it is the principal tool or intellectual property of Insight SRC’s business. It can and is used to ascertain the health of other organisations and not only schools. Dr Hart described the commercial activities associated with its use. In addition to charging a fee for administering the questionnaire Insight SRC might also charge a fee for organisational development activity – briefings, trainings and educative and development processes – and for research done at the request of a client.

108    Dr Hart gave evidence in the course of his cross-examination about the relationship between him, Hart Cultural Lodges and the applicants prior to 30 June 2009. He said that copyright in the SOHQ had never been assigned to Insight SRC. That may be accepted. He said that it had only ever been a licensee or the exclusive licensee. He accepted that Hart Cultural Lodges was his family trust and had never carried on business. He said that at some stage – “the early days … before IP Holdings” – Hart Cultural Lodges obtained the copyright in the SOHQ and licensed it to Insight SRC. He said that prior to 2007, he licensed the copyright to Insight SRC. Dr Hart acknowledged that he did not understand the “licensing arrangements and assignment”. Dr Hart’s evidence about these matters was vague and uncertain and I do not think I can make clear findings on the basis of it. One finding which can and should be made is that prior to 30 June 2009, Insight SRC used the SOHQ in the course of its business and exploited its commercial value and that that was done under some arrangement, the terms of which are unclear.

109    I turn now to examine the agreements and their effect.

Assignment – Dr Hart and Hart Cultural Lodges

110    There were two Deeds of Assignment between Dr Hart and Hart Cultural Lodges executed on 30 June 2009. I think that they, or one of them, was effective to assign the copyright in the SOHQ from Dr Hart to Hart Cultural Lodges, but not existing rights of action for infringement of the copyright.

111    There are curious features of the Deeds as ACER pointed out, but I do not think that they affect the validity of the assignment. First, the Deed dealing with the SOHQ states that it is made “to confirm the terms of an oral agreement made the 1st day of July 2007”. It is not clear what that statement is designed to achieve. The terms of any such agreement were not clearly proved (see [108] above) and, in any event, there cannot have been an effective assignment in July 2007 because there was no writing (see subs 196(3) of the Act). Secondly, both Deeds purported to transfer not only the intellectual property, but also the goodwill of Insight SRC’s business “upon or in relation to which the Intellectual Property has been used”. It is not clear to me how the goodwill of Insight SRC’s business could be transferred in the absence of it being a party to the agreement, or indeed precisely what was intended. At all events, I do not think either of these matters affects the validity of the assignment of the SOHQ.

112    As I have said, neither Deed assigned to Hart Cultural Lodges whatever rights of action Dr Hart had for infringement of copyright prior to 30 June 2009. It is a fair inference that at some point Dr Hart’s legal advisers realised there was a problem and that led to a Deed of Assignment between Dr Hart and Hart Cultural Lodges executed on 12 May 2011. The operative provisions of that Deed were as follows:

1.    In consideration of the sum of $300,000 exclusive of GST paid by the Assignee to the Assignor (the receipt whereof the Assignor hereby acknowledges) the Assignor as beneficial owner hereby assigns to the Assignee all copyright in the work known as The School Organisational Health Questionnaire and associated survey modules being the exclusive right to do and to authorise others to do any and all acts restricted by the Copyright Act 1968 (Cth) in relation to such work in Australia and all other countries in which copyright in such works subsists, together with all rights of action in respect of any past or existing infringements of such copyright including the right to claim damages for conversion in respect of any infringing works.

2.    For the avoidance of doubt, the assignment effected hereby between the parties applies with respect to the School Organisational Health Questionnaire a copy of which is annexed hereto.

113    In the recitals to the Deed, the two Deeds executed in June 2009 are referred to, as is the alleged oral agreement of 1 July 2007. Recitals D and E are in the following terms:

D.    This Deed of Assignment more completely gives effect to those earlier agreements and more perfectly assigns the intellectual property than was achieved by those earlier agreements.

E.    The parties adopt, incorporate and confirm into this Deed of Assignment those terms contained in the earlier deeds of assignment annexed hereto as if set out herein.

114    ACER submits that the applicants face two unsurmountable difficulties.

115    First, even assuming that the assignment of rights of action in 2011 was effective, the fact is that Dr Hart had no rights of action to assign. This was because, although prior to 30 June 2009 he was the owner of the copyright in the SOHQ, he was not using it or commercially exploiting it in any way. That was being done by Insight SRC. Therefore Dr Hart did not suffer any damage prior to 30 June 2009; if any party suffered damage it was Insight SRC.

116    Secondly, ACER submits that, assuming the Deeds executed on 30 June 2009 were effective to assign the copyright in the SOHQ, the most the Deed executed on 12 May 2011 could have achieved was to effect an assignment of bare or mere rights of action for infringement of copyright. ACER submits such assignments were not recognised at law. ACER further submits that the 2011 assignments were invalid because they purported to assign copyright which had already been assigned. As to this latter point, it is true that the copyright had already been assigned, but I do not think that is an obstacle to giving effect to the 2011 assignments so far as is possible.

117    To understand the significance of these submissions it is necessary to bear in mind that the applicants rely on rights of action assigned to them and the first step in the chain is the assignment from Dr Hart to Hart Cultural Lodges. If that was not effective, the link is broken and the applicants’ claims must fail. Put another way, it is not suggested that Dr Hart assigned rights of action directly to both or either of the applicants.

118    As to ACER’s first submission, it is necessary to consider what action Dr Hart could have taken immediately prior to the execution of the Deed on 12 May 2011 by way of a damages claim for infringement of the copyright in the SOHQ. The possibilities are general damages under subs 115(2) and additional damages pursuant to subs 115(4) of the Act. As to the former, the difficulty for the applicants is that Dr Hart was not personally conducting a business involving the use of the SOHQ between the beginning of 2006 and 1 October 2009 and it has been no part of their case before me that Dr Hart personally would have exploited any commercial opportunities with ISV. Furthermore, Dr Hart did not claim that he could recover any such loss as the major shareholder of Insight SRC and that the Court could lift the corporate veil. On the other hand, what Dr Hart did have as the copyright owner was a right to nominal damages for infringement of copyright and a right to claim additional damages under subs 115(4). An award of nominal damages is appropriate to vindicate the invasion of a copyright owner’s proprietary right: Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd (No 2) (2008) 76 IPR 763.

119    As to ACER’s second submission, each party referred me to the principles governing the assignment of bare or mere rights of action and the cases which have discussed those principles including Poulton v Commonwealth (1953) 89 CLR 540; Trendtex Trading Corporation v Credit Suisse [1982] AC 679 (“Trendtex Trading Corporation v Credit Suisse”); Salfinger v Niugini Mining (Australia) Pty Ltd (No 3) [2007] FCA 1532; TS & B Retail. Since I heard closing submissions in this proceeding the High Court has delivered its decision in Equuscorp Pty Ltd (formerly Equus Financial Services Ltd) v Haxton (2012) 286 ALR 12. In issue in that case was whether a right to claim money had and received was capable of assignment. French CJ, Crennan and Kiefel JJ said (at 31-2 [50]-[51]) that a right of action was assignable if it was an incident of, or subsidiary to, a right of property (Ellis v Torrington [1920] 1 KB 399) or if the assignee had a genuine commercial interest in the enforcement of the claim of another (Trendtex Trading Corporation v Credit Suisse). Their Honours held (at 32 [53]) that an assignee had a genuine commercial interest in the enforcement of the claim of the assignor where, for example, a claim for money had and received, was assigned along with contractual rights, albeit those rights were contestable. Gummow and Bell JJ said (at 38 [79]) that it had long been the case that there was an exception to the rule against the assignability of a bare or mere right of action that the assignee had an interest in the suit and that it was now recognised that a genuine commercial interest was a sufficient interest. Their Honours cited Trendtex Trading Corporation v Credit Suisse in support of that proposition. Heydon J also said (at 58-9 [156]) a genuine commercial interest is sufficient and referred to Trendtex Trading Corporation v Credit Suisse with approval. It must now be taken to be established in Australia that the circumstances in which a bare or mere right of action may be assigned include a case where the assignee has a pre-existing genuine commercial interest in enforcing the claims of the assignor.

120    The Deeds executed on 30 June 2009 transferred copyright in the SOHQ from Dr Hart to Hart Cultural Lodges. The Deed executed on 12 May 2011 purported to assign rights of action in relation to the copyright from Dr Hart to Hart Cultural Lodges. Ownership of copyright in the SOHQ by Hart Cultural Lodges in May 2011 would be a sufficient genuine commercial interest for the purpose of sustaining an assignment in May 2011 of bare or mere rights of action for infringement of copyright. However, by Deed dated 1 October 2009, Hart Cultural Lodges purported to assign copyright in the SOHQ to Insight SRC IP Holdings. Assuming that assignment was effective, Hart Cultural Lodges was not the owner of the copyright in May 2011 when Dr Hart purported to assign rights of action to it. Does that make any difference to whether it had a genuine commercial interest?

121    There was no evidence, or at least no clear evidence, as to why ownership in the copyright in the SOHQ and then rights of action for infringement were transferred through Hart Cultural Lodges. Plainly, it, like the applicants, was part of Dr Hart’s commercial interests. The relationship between Dr Hart and Hart Cultural Lodges and the latter’s involvement in the assignments in 2009 suggest to me that it would be artificial to conclude that it did not have a genuine commercial interest in the assignment of rights of action in May 2011.

122    The Deeds of Assignment between Dr Hart and Hart Cultural Lodges were effective to transfer the copyright in the SOHQ and rights of action for infringement from Dr Hart and Hart Cultural Lodges. Dr Hart’s rights of action included a right to claim nominal damages and additional damages under subs 115(4), but he had no right to general damages under subs 115(2) of the Act.

Assignment – Hart Cultural Lodges and Insight SRC IP Holdings

123    The Deed of Assignment between Hart Cultural Lodges and Insight SRC IP Holdings was executed on 1 October 2009. Assuming that at that point Hart Cultural Lodges was the owner of the copyright in the SOHQ, then I think the assignment was effective to assign to Insight SRC IP Holdings the copyright in the SOHQ. The assignment did not include existing rights of action. The Deed did purport to transfer certain goodwill in the business of Insight SRC in the same way as the Deed between Dr Hart and Hart Cultural Lodges, but for the same reasons I do not think that circumstance affects the validity of the Deed.

124    Again, it may be inferred that realising that there was a problem with any rights of action, the parties executed a Deed of Assignment on 12 May 2011. The operative clauses of the Deed were as follows:

1.    In consideration of the issue of 774 further ordinary units in the Insight SRC IP Holdings Unit Trust by the Assignee to the Assignor (the receipt whereof the Assignor hereby acknowledges) the Assignor as beneficial owner hereby assigns to the Assignee all copyright in the work known as The School Organisational Health Questionnaire and associated survey modules being the exclusive right to do and to authorise others to do any and all acts restricted by the Copyright Act 1968 (Cth) in relation to such work in Australia and all other countries in which copyright in such works subsists, together with all rights of action in respect of any past or existing infringements of such copyright including the right to claim damages for conversion in respect of any infringing works.

2.    For the avoidance of doubt, the assignment effected hereby between the parties applies with respect to the School Organisational Health Questionnaire a copy of which is annexed hereto.

Recitals C, D and E are in the following terms:

C.    This Deed of Assignment confirms the terms of an earlier deed of assignment made the 1st day of October 2009, a copy of which is annexed hereto.

D.    This Deed of Assignment more completely gives effect to that earlier agreement and more perfectly assigns the intellectual property than was achieved by that earlier deed of assignment.

E.    The parties adopt, incorporate and confirm into this Deed of Assignment those terms contained in the earlier deed of assignment annexed hereto as if set out herein.

125    Some of the other recitals state incorrectly that Hart Cultural Lodges was the author of the SOHQ, but I do not think that affects the validity of the Deed.

126    If the transactions between Dr Hart and Hart Cultural Lodges were ineffective, or effective only to a limited extent, then those results flow through to the transactions between Hart Cultural Lodges and Insight SRC IP Holdings. Hart Cultural Lodges could not transfer rights of action it did not have or it could only transfer such rights of action as it had. If the transactions between Dr Hart and Hart Cultural Lodges were fully effective then there is nothing in the transactions between Hart Cultural Lodges and Insight SRC IP Holdings which suggests that they were not effective. Hart Cultural Lodges did not have to show it sustained any loss or damage because it merely purported to transfer rights of action it had received from Dr Hart. Insight SRC IP Holdings had a genuine commercial interest in enforcing the assignor’s claims in May 2011 because it remained the owner of the copyright in the SOHQ at that time.

Exclusive Licence – Insight SRC IP Holdings and Insight SRC

127    There is an exclusive licence agreement between Insight SRC IP Holdings as licensor and Insight SRC as licensee which was executed on 1 October 2009. The SOHQ is part of the property which is the subject of the licence. The term of the licence is from 1 October 2009 to the date upon which the Shareholders Deed (defined in the Deed) ceases to have effect. The consideration for the licence is a royalty of ten per cent of gross revenue. The licence itself is a licence with respect to, inter alia, the SOHQ, “to enjoy, commercialise and exploit” the SOHQ in the course of Insight SRC’s business.

128    The parties executed a further agreement on 12 May 2011. It is described as an intellectual property licence agreement and the operative provisions of the agreement are as follows:

1.    The parties confirm the terms of the exclusive licence agreement dated 1 October 2009, a copy of which is annexed hereto.

2.    For the avoidance of doubt, the licence hereby effected between the parties applies with respect to the literary work known as the School Organisational Health Questionnaire a copy of which is annexed hereto and in respect of all copyright in such literary work including rights of action in respect of any past or existing infringements of such copyright including the right to claim damages for conversion in respect of any infringing works.

129    As with the agreements between Hart Cultural Lodges and Insight SRC IP Holdings, there is no reason to doubt the effectiveness of the agreements between Insight SRC IP Holdings and Insight SRC if the transactions earlier in the chain were effective. Insight SRC IP Holdings was simply passing on rights of action it had obtained and Insight SRC as exclusive licensee no doubt had a genuine commercial interest in enforcing rights of action for infringement of copyright.

The Defence in subs 115(3) of the Act

130    ACER relies on the defence in subs 115(3) of the Act. In order to make out the defence it must be shown that at the time of infringement it was not aware, and had no reasonable grounds for suspecting, that its use of part of the SOHQ was an infringement of copyright. I address ACER’s state of mind and the objective circumstances in my discussion of the applicants’ claim for additional damages under subs 115(4). Having regard to my conclusions in that context, ACER is not able to make out the defence in subs 115(3) of the Act.

Damages

131    The applicants claim general damages under subs 115(2) and additional damages under subs 115(4) of the Act. They have no claim for general damages because Dr Hart had no claim for general damages which he could assign to them. Nevertheless, in case I am wrong, I will address the claim for general damages on the assumption that the applicants are able to bring such a claim.

General Damages

132    As I have said, the applicants’ claim for general damages is based on the loss of the contract or contracts that they claim they would have entered into with ISV but for ACER’s infringement of their copyright in the SOHQ. It is not sufficient for the applicants to show that it was the copyright infringement which enabled ACER to secure the contracts with ISV. They must show that, but for the infringements, they would have secured the contracts: TS & B Retail at 501 [227]. In proceeding in this way they were relying on the second of the two common methods of assessing damages in copyright cases, namely, the plaintiff’s loss of profits where the plaintiff and defendant are in actual or potential competition in relation to the copyright work (TS & B Retail at 495-496 [207]).

133    Two questions must be answered. First, can the Court be satisfied on the balance of probabilities that Insight SRC would have been awarded contracts with ISV but for ACER’s infringement of copyright? I note that the applicants did not put an alternative case of a loss of a chance of being awarded contracts with ISV (Sellars v Adelaide Petroleum NL (1994) 179 CLR 332). Secondly, assuming the answer to the first question is yes, what value, in terms of loss of profits, should be placed on those lost contracts?

134    The most convenient starting point is an examination of the actual contracts between ACER and ISV.

135    Mr Wayne Dawes gave evidence about ACER’s contracts with ISV. He is the company secretary and director of corporate services of ACER. The role of the corporate services division of ACER is to provide infrastructure, service and support to the rest of the organisation.

136    Dr Rowe was employed by ACER from February 2000 to May 2008. After May 2008, he was employed by ACER on a part-time consultancy basis until his death in early 2009. He was a senior employee within ACER and he had a high level of autonomy in managing projects. He managed the project with ISV and had primary conduct of that project.

137    The starting point in the relationship between ACER and ISV is an agreement between those parties dated 24 December 2004 and executed on 11 January 2005. The agreement provided for ACER to provide research services to ISV. Those services were the provision of two briefing papers which in broad terms involved “desktop” reviews of “best practice” related to educational effectiveness. It was expected that draft versions of the papers would be completed by the end of January 2005. The project fee was $40,700 including GST and all professional fees and disbursements. One of the briefing papers prepared by Dr Rowe and dated December 2005 was put in evidence.

138    Thereafter there were various phases in an ongoing relationship between ACER and ISV: Pilot Project 2006, Ongoing Project 2007, Ongoing Services 2008 and Ongoing Services 2009. Only the broad details of these phases are relevant for present purposes.

139    In about May 2006, ACER prepared a paper outlining an ACER and ISV project called or appearing under the title of “Building Educational Effectiveness in Independent Schools”. The paper refers to a pilot project. It also refers to the use that can be made of feedback data of teachers’ perceptions of their work environments. There is a reference to the “57-item” SOHQ developed by Hart and colleagues. The paper contains a statement to the effect that “for the purposes of the present project”, only 5 of the 12 “latent domains of interest” or “constructs” are to be used. ACER proposed to build an outline system for delivering the “Teachers’ Perceptions of their Work Environment” survey.

140    On 9 May 2006, ACER and ISV executed an agreement whereby ACER was to provide research services entitled “Building Educational Effectiveness in Independent Schools” in accordance with the Strategic Plan of ISV in consideration whereof ISV was to pay ACER the sum of $77,461 inclusive of GST. The research services involved the building of an online system delivering the survey consisting of the 25 items or questions. The agreement required ACER to deliver the research services by December 2006. Dr Rowe was the project director within ACER and, as I have said, he was responsible for the project. He drafted a letter with the 25-item survey as an appendix for ISV to send to school principals who were to participate in the project.

141    In October 2006, Dr Rowe prepared a draft example of what he called “the system and school reports” for Billanook College. The report refers to the 25-item survey and in a footnote on page 3 contains the following acknowledgment:

For the present project, this instrument was adapted from the 57-item and 12 scales of the School Organisational Health Questionnaire – originally developed by Hart and colleagues (Hart et al, 1992, 1993, 2000).

142    In November 2006, ACER and ISV produced a report which contained “quantitative” information related to analysis of responses to an online survey of school staff perceptions of their work environment during 2006, obtained from a pilot sample of 1514 participants drawn from 14 Victorian independent schools, involving 1252 teachers (824 females; 428 males) and 262 non-teaching support staff (205 females; 57 males).

143    As with the document produced in October 2006, there is an acknowledgment in a footnote of the 57-item and 12 scales of the SOHQ.

144    ISV paid ACER for the services rendered in relation to the pilot project in accordance with the agreement executed on 9 May 2006.

145    ISV decided to engage ACER to provide further research services to it. Those services involved the delivery of the survey of 25 items to other independent schools during 2007. Payment was not fixed because it was not known at the time the agreement was entered into (that is, 16 April 2007) how many schools would participate. ACER sent an invoice to ISV on 22 August 2007 for $21,600 plus GST, being 30 participating schools at $720 per school.

146    In November 2007, ACER and ISV produced a report containing quantitative information related to analysis of responses to the online survey during 2007. The information in the report was obtained from a sample of 3,870 participants drawn from 53 campuses across 30 independent schools. On 15 November 2007 ACER sent an invoice to ISV for $50,400 plus GST calculated on a fee of $1680 per participating school, multiplied by 30 participating schools.

147    ACER and ISV entered into an agreement for the provision of research services by ACER in 2008. ACER provided services including system-level statistics on survey data, system-level reporting and testing of the 2008 website and website hosting and collection data. Those services were provided by ACER to ISV during 2008 for a consideration of $31,849 plus GST. ACER and ISV produced a report in September 2008 and the report contained information from a sample of 3,492 participants drawn from 31 Victorian independent schools

148    ACER and ISV entered into an agreement for the provision of research services by ACER in 2009. ACER provided services including development and testing of the 2009 website and website hosting and collection of survey data. ACER rendered an invoice dated 12 November 2009 for $34,694 plus GST. ACER and ISV produced a report in October 2009 and that report contained information obtained from a sample of 3270 participants drawn from 31 Victorian independent schools. ACER did not perform any further work for ISV after October 2009 and its last invoice to ISV was the invoice dated 12 November 2009.

149    A summary of the fees which ACER received from ISV in connection with the BEE Project is as follows:

150    Presumably, in the event that the applicants elected to claim an account of profits rather than damages, Mr Dawes prepared not only a summary of the revenue ACER earned from the BEE Project, but also the expenses incurred by ACER in relation to the project. He provided a detailed explanation of his calculations of the costs or expenses incurred by ACER in connection with the BEE project. A summary of those costs and expenses is as follows:

151    Mr Dawes calculated a figure for costs and expenses of $213,763.27. There seems to be a slight discrepancy between my calculations and Mr Dawes’ total figure. However, the important point is that on Mr Dawes’ analysis, ACER did not make any profit from the BEE Project.

152    Mr Dawes referred to a system in place at ACER to obtain permission from third parties to use copyright material and to a training policy it has for its staff in relation to copyright issues. ACER has a Permissions Unit which deals with requests for permission to use copyright material of third parties.

153    Mr Dawes was not challenged in cross-examination with respect to the factual matters in his evidence-in-chief and I accept his evidence.

154    Dr Gerard Calnin was employed by ISV from 2005 to June 2009. He performed part-time consulting work for ISV during 2005 and then in December 2005 or January 2006 he was employed full-time by ISV as Director of Policy and Research. He has a long history of involvement in the education sector.

155    ISV provides services to more than 200 independent schools in Victoria. It represents the interests of those schools. It is a not-for-profit organisation which has approximately 40 to 50 staff. As Director of Policy and Research Dr Calnin was responsible for research projects undertaken by ISV on behalf of, or in the interests of, member schools. One such project was the BEE project with ACER. When Dr Calnin began his work with ISV in May 2005 the BEE project was in its early stages. Dr Calnin described the early stages of the project in terms which were not inconsistent with the evidence of Mr Dawes.

156    ISV saw the development of a suite of survey tools as a means whereby in due course it could increase the range of survey tools it provided to member schools. The broad purpose of the development of the survey which became the 25-item survey from ISV’s point of view was to provide data on areas relevant to staff satisfaction which, according to Dr Calnin, was considered to relate to school effectiveness.

157    In addition to the 25-item survey developed by ACER, ISV entered into contracts with Associate Professor Richard Bell from the Department of Psychology at the University of Melbourne for him to develop a survey tool to measure parent satisfaction, and two student survey tools one of which was generic and the other of which focused on students’ views on individual teacher practices.

158    Dr Calnin said that a staff satisfaction survey was of use in that it provided data that could be used in decision-making, and it facilitated benchmarking. An attractive feature of the survey prepared by Dr Rowe was that it was relatively short.

159    Dr Calnin said that no charge was made to the schools which participated in the pilot project in 2006 and that the charge by ISV for the schools which participated in the years 2007, 2008 and 2009 was a fixed price of approximately $3,000 per school.

160    Dr Calnin identified the particular benefits to ISV of entering into a commercial relationship with ACER. First, there was ACER’s reputation for high quality research and the fact that it is not aligned to a particular State or Territory. Secondly, it would assist ISV in the development of its own research arm because it would involve a partnership with a high quality institution which would bring credit to ISV’s reputation.

161    In 2009 (after a pilot programme in 2008) ISV commenced offering to its member schools satisfaction surveys marketed under the name LEAD (Listen, Evaluate, Act, Deliver). There were five surveys one of which was the 25-item Staff Satisfaction Survey. The surveys could be purchased individually or as a package. The charge for individual surveys was $3,000 and the charge for the package was $10,000.

162    I am satisfied on the balance of probabilities that Insight SRC would have secured some form of contract or contracts with ISV had not ACER infringed copyright in the SOHQ. In reaching this conclusion I take into account Dr Calnin’s evidence that an advantage to ISV of a contract with ACER was the association with a highly regarded research organisation. However, I think that consideration is outweighed by the following factors. First, the evidence supports the conclusion that Dr Hart and his companies had a good reputation in the marketplace. Secondly, and more importantly, Dr Hart had a ready-made survey tool which had been used for many years by a public authority, that is, the Department, and considerable data to go with it. The BEE Report dated March 2007 contained a preface written by Dr Calnin. In that preface Dr Calnin referred to the data for 14 pilot schools and then made the observation that the results of the study were “benchmarked against a national sample of 28,000 teachers (from government, Catholic and independent schools in each of the states and territories)”. Whether ACER had the data from a national sample and, if so, how it obtained it, is unclear. What is clear is that Dr Hart and his companies had that data and that fact, and the fact that it provided an opportunity to benchmark the results of the administration of the SOHQ, were attractive features of the services Dr Hart and his companies were in a position to provide. In the context of these matters, I do note, however, that there was evidence to suggest that in the early stages of the BEE Project, ISV was considering the use of surveys provided by a company called Sagacious Insights Pty Ltd, in addition to, or in combination with, the surveys available from and provided by ACER.

163    The applicants formulated their claim for damages in two ways. First, they relied on the calculations Dr Hart had performed and set out in document no. 35. Secondly, and in the alternative, the applicants submitted that they should be awarded the revenue earned by ACER as profit (that is, the sum of $213,324.82) and the likely income earned by ISV in 2009 and 2010 from the LEAD option of $807,000.

164    Before examining these issues I must first determine if there is any limit on the period over which damages should be calculated. In that context it is relevant to examine when the infringer would have produced its own (in this case) survey tool (TS & B Retail at 504 [238]. The evidence of Drs Cotton, Stephanou and Cuttance was directed to this issue, as was some of the evidence of Dr Hart. It is convenient to begin with a summary of the evidence of Drs Stephanou, Cuttance and Cotton.

165    Dr Andreas Stephanou is a senior research fellow at ACER. Dr Stephanou’s area of expertise is measurement and he is an expert psychometrician. He has worked at ACER since 1989, first as a research officer, then as a data analyst and then as a research fellow. He has considerable experience in analysing research data obtained from the administration of questionnaires. Dr Stephanou referred to the British Journal Article. He explained a number of the concepts associated with the development of the SOHQ, including factor analysis and the limitations of factor analysis. Dr Stephanou said that during his last 10 years at ACER he had been involved in about 20 projects which had involved the preparation of survey tools as part of the project. Dr Stephanou was taken to the report for the BEE Project in 2007 and asked to estimate the cost of and time involved in the preparation of a survey tool which would meet the objects set out in the Report. His estimate was $1,000 per item or question, being a total of $25,000. Dr Stephanou said that this equated to about 300 hours at about $85 per hour. He said that in 2005 ACER had the staff who could perform the functions required to produce a new survey tool. Dr Stephanou also said that he worked with Dr Rowe on a number of projects and that Dr Rowe was always careful to acknowledge and reference the work of others.

166    Under cross-examination Dr Stephanou agreed he had no expertise in organisational health or psychology or organisational psychology. Dr Stephanou said it would not be appropriate for a professional academic to use new work of a fellow academic for a project like the BEE project.

167    Dr Peter Cuttance has academic and practical experience in education and I accept his statement that he has considerable experience in educational measurement. He is the Executive Director of Research Australia Development and Innovation Institute. On occasion, that business competes with Insight SRC. Dr Cuttance was given the report for the BEE Project in 2007 and the British Journal Article. He was asked to estimate the number of days that would be required to develop, in 2006, an alternative survey tool (that is, alternative to the 25-item survey in the BEE Report), up to the stage of pilot testing, which would meet the goals of the BEE Project and not involve any substantial use or reproduction of the SOHQ. His estimate was as follows:

168    Dr Cuttance said that there was a wide range of other organisations in Australia in the period of 2005 and 2006 which could have developed a survey tool or licensed an existing survey tool. He identified those organisations. Dr Cuttance also identified the tasks involved in administering a survey tool to one or more schools. I do not need to set out the details of these matters.

169    Dr Cuttance agreed that his expertise was in educational measurement and that he would not call himself an organisational health expert. Dr Cuttance agreed that the BEE Project did not involve a pilot project in 2006 because it involved an already well-tested survey tool. He described it as a replication.

170    Dr Peter Cotton is an organisational and clinical psychologist. He practises in both fields and holds a number of posts and appointments. I have already referred to his interests in each of the applicants. He said that he acquired those interests because he recognised the commercial value of the SOHQ.

171    Dr Cotton first met Dr Hart in 1996 when Dr Hart presented a paper prepared by Professor Wearing and himself entitled “Occupational Stress and Well-Being: a Systematic Approach to Research, Policy and Practice”. Dr Cotton described the SOHQ as a climate survey which is a much broader concept than a tool for determining teacher perceptions of specific issues. Dr Cotton gave evidence of the value of a reliable survey and he referred to the SOHQ as the emerging professional standard in Australia for climate surveys. The SOHQ is used by the APS. He described the importance of a survey having the features of both reliability and validity.

172    Dr Cotton criticised the approach of Doctors Stephanou and Cuttance in not recognising the importance of a survey being based on a recognised organisational behaviour model. Dr Cotton described Dr Hart’s groundbreaking work as having two features, being the shift in emphasis from operational or classroom factors to organisational factors, and the fact that positive emotional states had a more important influence than negative emotional states. Dr Cotton said that the development of the SOHQ was informed by a decade of research which contributed most of the large body of literature on occupational stress.

173    Dr Cotton was chair of the Ethics Committee of the APS from 1994 until 1996. He said that the use of questions developed by another party in projects involving commercial gain, without gaining permission from the author, is unethical and breaches the Ethical Guidelines of the APS.

174    In cross-examination, Dr Cotton agreed that there would be a number of people in Australia with expertise in organisational health psychology and in the educational sector. Dr Cotton said that the use of questions without seeking and gaining the permission of the author was contrary to accepted practice. Normally, permission for use for research purposes would be given for no fee or a negligible fee; where permission was given for use for commercial purposes it would be expected that a more substantial fee would be charged.

175    I do not accept the evidence of Dr Stephanou and Dr Cuttance as to the costs of preparing a survey which would be equivalent to the SOHQ. Broadly, I accept the criticisms of their evidence by Drs Cotton and Hart.

176    Dr Stephanou was clearly an honest witness, but I do not accept his estimate of the cost of developing a 25 question survey. His expertise in the area was limited and the principal basis for his opinion was what was described as a rule of thumb. I accept Dr Hart’s evidence as to the development work, re-tests, and studies required to develop a survey tool such as the SOHQ. I also accept that the SOHQ is a high quality tool.

177    For similar reasons, I place no weight on Dr Cuttance’s estimate which, in any event, went no further than the development of a survey up to the stage of pilot testing. Like Dr Stephanou, Dr Cuttance was clearly an honest witness. No doubt a number of points he made were sound as a matter of academic theory. However, I prefer the evidence of Dr Hart as to the work required, particularly the work required in terms of what he described as subsequent confirmatory studies and tests and benchmarking the measurement scales against local and international best practice.

178    I am not satisfied on the balance of probabilities that had ACER not infringed copyright in the SOHQ it would have developed an alternative survey tool at any time between early 2006 and October 2009.

179    I turn now to examine the applicants’ methods of calculating damages.

180    Dr Hart’s calculations of the applicants’ loss or damage in document no. 35 are based on a number of assumptions which have not been established by the evidence. The resulting figures are very substantial and even Dr Hart said in the course of his evidence that he “fell off” his chair when he first saw the final figures. In the applicants’ closing written submissions the only submission made in support of Dr Hart’s calculations in document no. 35 was as follows:

53.    CB #35 is perfectly defensible and should be adopted.

181    I recognise the extent to which Dr Hart based the assumptions and calculations in document no. 35 on his actual experience, such as the contract with CEOM. Nevertheless, I do not think it forms any proper basis for an award of damages. There are errors, uncertainties and assumptions not supported by evidence in the document.

182    In the circumstances, it is sufficient for me to identify in broad terms the calculations in Document 35 and the problems with the calculations and assumptions underlying them.

183    For the years 2006 to 2010 inclusive, and adopting what he called a single school method, Dr Hart calculated revenue of $3,512,030.56 and (incorrectly) survey costs of $3,166.80. The correct figure for survey costs, even on Dr Hart’s calculations, was $15,834.00. The revenue was calculated by determining the revenue for a particular year, that is, 2010 and then determining the revenue for previous years by subtracting CPI increases. The revenue for 2010 was calculated by assuming a certain number of teachers (that is, 21,668) and then multiplying that figure by reference to an amount of revenue per teacher. The amount of revenue per teacher was calculated by reference to a recent example involving the applicants and 180 staff at an independent school in Victoria. I am disposed to place no weight on this calculation. There is no evidence to suggest that, but for the infringement of copyright, the applicants would have administered the SOHQ to 21,668 teachers or associated staff in 2010, or that the costs of generating income of about $3.5 million would have been as low as approximately $16,000.

184    In the alternative to the single school method, Dr Hart prepared calculations on the basis of what he called the single project method. This method proceeds on the assumption that there is one project involving a certain number of schools. A figure was calculated for 2009 and CPI increases added or subtracted to reach a total figure of $1,428,645.12 for the period from 2006 to 2010 inclusive. The assumption in the calculation is 216 schools and 21,668 teachers. Again, the evidence does not support those assumptions and again it is difficult to accept that the costs of generating additional income of about $1.4 million would have been as low as approximately $16,000.

185    In addition to these two alternative amounts, Dr Hart, in document no. 35, calculated a loss of $1,421,250 for loss of fees with respect to the following services:

1.    Services involving the design and implementation of training and development programmes;

2.    Services involving the provision of consulting services and advice to ISV; and

3.    Services involving the provision of research and policy services to ISV.

186    When asked about the calculations Dr Hart’s answers inspired no confidence in their accuracy. He had calculated a figure of $1,895,000 and then reduced it by 25 per cent. As I read document no. 35, the reduction of 25 per cent represented the “likely cost base for delivering these services”. However, in his evidence he said the reduction of 25 per cent was to reflect the fact that the associated services would not be taken up by all schools. Leaving that point aside there is simply no evidence to support the assumptions underlying the calculation.

187    Dr Hart’s calculations in document no. 35 do not provide a reliable basis for the assessment of loss or damage suffered by the applicants by reason of ACER’s infringement of their copyright in the SOHQ.

188    The applicants’ alternative method of calculating their loss or damage was put forward in their closing submissions. It consisted of two components. First, they claimed the revenue earned by ACER of $213,324.82 and submitted that there was no reason to deduct expenses because the applicants had the online systems “ready to go”. Secondly, they claimed income earned by ISV from its participating schools. They submitted that the income earned by ISV should be included in quantum “because ACER armed ISV with the means to infringe and intended ISV to infringe”. The figure claimed for this component is $807,000.

189    I would exclude the second component. The applicants’ case has always been that it lost the benefit of contracts ACER secured, not contracts ISV secured.

190    In the absence of any better evidence as to general damages, I am disposed to start with the revenue actually earned by ACER in relation to the BEE project and reduce it by a figure for costs to reach a figure for profits. It is not possible to calculate the costs with any precision. The exercise being one of assessing damages, I must do the best I can providing the result is not too speculative. The applicants had the SOHQ ready to go and it is apparent from Dr Cuttance’s evidence that some of ACER’s costs would not have been incurred by the applicants. At the same time, I do not accept the costs would have been minimal. I propose to reduce ACER’s revenue figure to $130,000 to take account of costs. That is the figure I would have awarded had I decided that the applicants were entitled to general damages.

191    There were other claims for loss and damage which were made in the applicants’ pleadings, but not pursued in closing submissions. No loss and damage flowed from the publication of two papers on ACER’s website bearing in mind public disclosure of the Fremantle paper and the fact that the British Journal Article was widely available. There is no proof of loss and damage in relation to the alleged loss of a contract or transaction with ACARA.

Additional Damages Pursuant to Subs 115(4) of the Act

192    Dr Rowe is deceased and the witnesses from ACER who were called to give evidence, Mr Dawes and Dr Stephanou, were not involved in the BEE project. The applicants identified a number of persons from ACER, either in its management team or the team involved in the BEE project, who, they submitted, could have thrown light on the use of the SOHQ, but who were not called.

193    Dr Calnin of ISV was involved in the BEE project for at least part of its duration. Again the applicants identified witnesses from ISV such as the chief executive officer, Ms Michelle Green, who could have thrown light on the use of the SOHQ but who were not called.

194    In the circumstances, ACER and Dr Rowe’s state of mind and conduct must be assessed having regard to the documents and the inferences which can be drawn from all the evidence.

195    ACER and Dr Rowe would have known that it was not permissible to use the work of another for commercial purposes without that person’s consent. That is clear from all the evidence in the case but, in particular, the evidence of Drs Stephanou and Cotton and the practice of ACER itself. As to the latter matter, Mr Dawes gave evidence of ACER’s practice of dealing with copyright issues through its Permissions Unit. Acknowledging the source of the work in a footnote in a report, as Dr Rowe did in a couple of reports he prepared in connection with the BEE Project, does not overcome the need for the owner’s consent. In fact, it has to be said that Dr Rowe’s statement that he “adapted” his questionnaire from the SOHQ is correct in only a very limited sense.

196    It was suggested by counsel for ACER that Dr Rowe may have believed the SOHQ was in fact owned by the Department, given Dr Rowe’s footnoting of the 1992 Manual version of the SOHQ, and use of the shortened version of the questionnaire, the version in use by the Department until approximately 1999. Alternatively, it was also suggested by counsel that ACER and Dr Rowe may have considered that copyright in the SOHQ would not be enforced having regard to the extensive and longstanding use of it by the Department. It is difficult to draw these inferences, and I do not do so, bearing in mind the exchange between Professor Hill and Dr Rowe on the one hand, and Dr Hart on the other in 1999.

197     In 1999, it came to Dr Hart’s attention that Professor Hill and Dr Rowe were “commercialising” the use of the SOHQ for government schools. The precise details of the use were not established by the evidence. At all events, Dr Hart had a meeting with Dr Rowe and then a second meeting with Dr Rowe and Professor Hill during which he made clear to Professor Hill and Dr Rowe that they could use the questionnaire for non-commercial research purposes associated with a project called the Quality Schools Project, but that they were not to use it for anything else without his permission. Dr Hart was to be given access to the data they collected. Dr Hart confirmed the content of his discussions in a letter to Professor Hill dated 5 September 1999. I find that Dr Hart made it clear to Dr Rowe in 1999 that he (Dr Hart) was the owner of the copyright in the SOHQ.

198    I think that this is an appropriate case for an award of additional damages under subs 115(4) of the Act. I have taken into account the matters referred to in that subsection. It seems to me that this was a flagrant breach of copyright. By reason of his conversations with Dr Hart in 1999, Dr Rowe must have known that Dr Hart claimed copyright in the SOHQ. He would have known that neither he nor anyone at ACER had been responsible for creating the survey he provided to ISV. There is no evidence that he or anyone else at ACER made an application for permission to use part of the SOHQ. In other words, this is not a case where the infringer applied for permission to a third party under the mistaken belief that that party was the owner of copyright in the work.

199    Dr Rowe on behalf of ACER published the SOHQ, or at least a substantial part of it, on the internet when he placed articles on the internet in 2002 and in 2005.

200    ACER received the benefit of a number of contracts with ISV over a fairly lengthy period (that is, early 2006 to October 2009). Although the evidence is that it did not make a profit on these contracts it enhanced its reputation and connections as a result of the contracts.

201    I think it is appropriate to award additional damages and I will award a sum of $32,500.

Other Relief

202    The applicants seek a declaration as to the ownership of the copyright in the SOHQ. Dr Hart’s ownership of the copyright in the SOHQ approximately 20 years ago was the subject of a strong challenge by ACER. The SOHQ is a valuable survey tool which is central to the success of Insight SRC’s business. In the circumstances, I think it appropriate to make a declaration as to ownership and I will hear the parties as to the terms of the order.

203    The applicants also seek injunctions against ACER. ACER is a reputable organisation which has not used, or facilitated the use of, the SOHQ since October 2009. Furthermore, it has given undertakings that it will not use the SOHQ in the future. By letter dated 14 February 2011, the solicitors acting for ACER wrote to the solicitors for the applicants giving certain undertakings “until we advise you otherwise”. By letter dated 24 June 2011, they wrote again offering the following undertaking on a permanent basis:

ACER, including by its servants, agents or otherwise, will not reproduce, publish, communicate to the public the School Organisational Health Questionnaire (including any version of that questionnaire), or a substantial part thereof, or the Survey Module, without the prior authority from either of your clients, save to the extent that any such future acts fall within any of the fair dealing provisions of the Copyright Act 1968 (or equivalent future statutory provisions).

204     It may be necessary to make an order about infringing copies on the internet and I will hear the parties as to that matter. Otherwise, I see no reason to grant injunctions.

205    I must also hear the parties as to costs and any other orders.

Conclusion

206    I assess damages in the sum of $32,510.00, being nominal damages of $10.00 and additional damages of $32,500.00. It seems to me that the award should be made in favour of the second applicant, but I will hear the parties as to that matter.

207    I will make the following directions:

1.    The applicants are to lodge and serve within 7 days draft minutes of order reflecting the conclusions reached in these reasons;

2.    The respondent is to lodge and serve within 14 days submissions indicating which orders, if any, it opposes and the grounds of opposition; and

3.    The applicants, if so advised, are to lodge and serve within 21 days submissions in response to the respondent’s submissions.

Associate:

Dated:    24 July 2012