Did You Get Permission to Cheat? Copyright Infringement Matter Taken All The Way To The High Court

The Facts – Real Estate Tool Box Pty Ltd v Campaigntrack Pty Ltd

Campaigntrack Pty Ltd was a company providing online marketing and sales services within the real estate industry, using their ‘Campaigntrack’ online software system to do so. To limit competition, Campaigntrack acquired the rights to the copyright associated with another cloud-based real estate marketing system, DreamDesk.

DreamDesk was developed by software developer David Semmens and was used by real estate agency Biggin & Scott under a licence granted by DreamDesk Pty Ltd (DDPL). The terms of Campaigntrack’s acquisition included the provision that Campaigntrack would grant DDPL a licence to use DreamDesk for business operations until October 3^rd 2016.

Following the acquisition, a director at Biggin & Scott instructed Semmens to construct a new software system with a similar functionality to the DreamDesk and Campaigntrack software. The director stated, however, that it must ‘not breach any other companies IP or ownership, in particular Dream Desk or Campaign Track’. Semmens subsequently produced the ‘Real Estate Tool Box’ software (‘Tool Box Software’), accompanied by the incorporation of Real Estate Tool Box Pty Ltd (‘RETB’).

Campaigntrack alleged that Tool Box Software reproduced parts of the DreamDesk source code and brought claims against the following parties on the basis that they had infringed, or authorised the infringement of, copyright in CampaignTrack’s software:

• Corporate trustee Real Estate Tool Box Pty Ltd (‘Tool Box’)
• David Semmens, a software developer responsible for developing the ‘Toolbox’ software
• Biggin & Scott Corporate Pty Ltd (‘Biggin and Scott’), and directors Paul Stoner and Michelle Bartels
• Dream Desk Pty Ltd and its director Jonathan Meissner

Under s 36(1) of the Copyright Act Act 1968 (Cth), copyright infringement will occur if a person does any act comprised in the copyright (‘direct infringement’) or authorise the doing of any of these acts (‘indirect infringement’).

When determining indirect infringement, the Court may consider factors including (i) the person’s capacity to prevent the act of infringement; (ii) the relationship between that person and the infringer; and (iii) whether the person took any reasonable steps to prevent or avoid the infringement.

A person may be found liable for authorising copyright infringement where they are ‘indifferent’ to the alleged infringement of a third party. Neutrality or inattention is not considered sufficient for a finding of indifference.

Proceeding in the Federal Court

Initially, the Federal Court found that Semmons had infringed the copyright subsisting in the DreamDesk source code in reproducing the whole, or a substantial part, of the code. The Court was not satisfied, however, that Biggin & Scott and associated parties authorised the infringement, finding that they lacked actual or constructive knowledge of the infringement.

Campaigntrack appealed to the Full Court, where the decision of the primary judge was overruled. The court found that correspondence between Campaigntrack and DDPL indicated that Biggin & Scott had authorised the infringement of Semmons in their indifference to the development of the Tool Box Software.

Biggin & Scott appealed to the High Court in regard to the finding of indirect infringement of copyright.

What did the HCA decide?

The High Court unanimously allowed the appeal, holding that there was no indication that Biggin & Scott was involved sufficiently in the infringement as to amount to authorisation.

Indifference is considered to amount to authorisation in circumstances where a party has reason to anticipate or suspect that the infringing act is likely, and has the power to prevent it, yet fails to take reasonable steps to do so.

In their ruling, the High Court noted that Biggin & Scott had engaged Semmons as a third party developer with specific expertise in an area they were inexperienced. The High Court found their explicit instruction to Semmons to not infringe copyright was sufficient as a basis for dismissing Campaigntrack’s claim of indifference. The Court further found that Campaigntrack had not established that Biggin & Scott were aware of, or suspected, Semmens of engaging in infringing acts at any relevant time, with Biggin & Scott having acted reasonably in not interfering with Semmons’ work.

Implications

In their decision, the High Court established a higher bar for establishing infringement of copyright by authorisation. An allegation of authorisation through indifference requires a factual basis, meaning there must be evidence that a person had knowledge sufficient to create a duty to take reasonable steps to avoid or prevent an infringing act by another person. That threshold was not satisfied in this circumstance.