Damage controls—the role of damages in protecting copyright

Article  \  7 Jun 2016

A recent decision from the Supreme Court of Queensland, Coles v Dormer (No 2) [2016] QSC 28, awarded significant additional damages against the defendants on the basis that they knowingly infringed copyright. The Court’s approach appears to be consistent with that of the New Zealand Court of Appeal, which awarded a similar amount of damages last year in Jeanswest Corporation (New Zealand) Limited v G-Star Raw C.V. [2015] NZCA 14. These cases provide a useful guide to the circumstances in which additional damages[1] may be awarded, and the likely amount of such awards.

The Queensland case came about after the Dormers lost out to Mr Coles in an auction for a house described as being in a ‘French provincial’ style with a ‘Caribbean influence’. Refusing to be deterred from their dream of owning the house, the Dormers ordered an exact replica of the house to be built in the same gated community, using a copy of the house plans. 

Mr Coles successfully obtained an injunction against the Dormers requiring them to undertake remedial work to remove the publically-visible features of the house that had been copied. The remedial work took the Dormers two years to complete.

In assessing damages, the Court awarded minimal compensatory damages of AU$10,000 to make up for the loss of enjoyment of a unique house for the two years that the remedial work was undertaken.

The majority of the damages award (AU$60,000) was made up of additional damages. The Court found that despite Mr Coles telling the Dormers that he owned the copyright to the house, they decided to take the risk of being sued and pressed on with their plans to build a replica of Mr Coles’ house, despite knowing it was a direct infringement.

The New Zealand Court of Appeal in the Jeanswest decision made a similar award of additional damages (NZ$50,000) for ‘knowing infringement of copyright’ where Jeanswest had copied G-Star's‘Elwood’ jean design to produce its own ‘Dean Biker Slim’ jean.

In the High Court, Heath J declined to award G-Star additional damages on the basis that Jeanswest’s motive in creating the Dean Biker jean was ‘not sinister’ and that the infringement occurred through ignorance of New Zealand’s copyright law. Heath J considered that Jeanswest Australia saw Jeanswest New Zealand as a branch office and as a result Jeanswest Australia’s legal adviser focused on Australian law when advising staff.

The Court of Appeal disagreed. Although Jeanswest had not been notified that they were infringing G-Star’s copyright prior to production, the evidence regarding the process of designing the jeans – by copying the features of garments designed by others and collected by Jeanswest personnel on trips around the fashion world – was viewed by the Court of Appeal as being ‘knowing infringement’. 

The Court of Appeal held that this was flagrant infringement and awarded G-Star NZ$50,000 in additional damages. The Court considered the following circumstances to be relevant.

  • Although the importation was very small (63 pairs of jeans), it was regarded as a ‘talker’ – industry speak for a product intended to test the market with a view to further importations if it sold well.
  • Jeanswest immediately stopped selling the Dean Biker Slim jean when it received a letter from G-Star’s solicitors, although by that time all the jeans had been sold.
  • Aspects of the way Jeanswest defended the claim reflected very badly on it.
  • Jeanswest is a substantial business and it should have obtained the relevant legal advice.

These cases suggest that when deciding whether to award additional damages, and the amount of those damages, a court is likely to assess several factors, including:

  • whether the copyright infringement has been deliberate or knowing,
  • the defendant’s response to being notified of the plaintiff’s rights and in defending the claim, and
  • the awards made in similar cases of copyright in both New Zealand and Australia.

What the approach of both the New Zealand and Australian Courts demonstrates in these cases is that damages will likely be awarded where defendants are found to have gained illegitimate advantage through the exploitation of another's copyright.

If you consider your copyright is being infringed, contact Jessica Miles or Kate McHaffie.

[1] Additional damages are available under the Copyright Act 1994 where the Court may award such damages as the case requires, giving particular attention to the flagrancy of the infringement and any benefit received by the defendant.