Home » Protection of Intellectual Property Rights-Beware the Unjustified Threat

Businesses risk winding up in Court in the event that they (incorrectly) assert that they own copyright (or other IP rights) in a work. Many people are unaware that the Copyright Act contains an "unjustified threats" provision which enables the aggrieved party to bring an action restraining the threats (including by injunction) and for damages, unless it can be shown that the aggrieved party is actually committing a breach of copyright (or other IP rights).

The High Court recently had to consider the provision in Concrete P/L v Parramatta Design & Developments P/L [2006] HCA 55, in which judgment was delivered 6 December 2006. In that case, the Court found that an architect who claimed ownership of copyright in drawings for a 14 unit development (when he was not entitled to do so) had made an unjustified threat to prevent the use of the drawings.

The architect was a party to a joint venture agreement and had prepared the plans as part of his role as a joint venturer. In the circumstances where the join venturers were acquaintances, they elected not to formalise the agreement between them and the architect did not maintain copyright in the drawings which were produced. A Development approval was obtained for 14 units on a site which the parties selected and purchased in accordance with the joint venture agreement, which contained the architect's drawings. The parties subsequently fell into dispute and a trustee was appointed to sell the property, which it did with the benefit of the Development approval. The architect objected to the trustee for sale, and the purchaser who acquired the property, taking the benefit of the drawings and, in the case of the purchaser, using the drawings to develop the site in accordance with the Development approval.

However, the architect did not otherwise object to the sale of the property with the Development approval and took no steps to stop either the sale or the purchaser taking the benefit of the Development approval (including the drawings) on the sale. The architect argued that it had not expressly authorised the use of the drawings and there was no implied agreement which permitted them to be used for the benefit of a third party.

The Court disagreed. They found that the intention was for the plans, when prepared in relation to the joint venture and submitted with the Development Application, to run with the land in the event that the development was approved.

Accordingly, the architect no longer retained copyright in the drawings, as it had passed with the Development approval to the purchaser under the contract of sale. As the architect was not entitled to claim copyright in the drawings, the threats which it had made to the purchaser - that it intended to prevent the use of the drawings on the basis that it retained copyright in them - was unjustified.

There are 3 clear morals from the story:

1. You must proceed carefully before making claims to enforce or protect copyright (or other IP rights) in your work. If the claim is not properly based, you face the prospect of ending up on the wrong end of a law suit.
   
2. Agreements must always be properly documented to avoid any heartache involved in unravelling the deal if it all goes wrong.
   
3. If you create valuable IP, you should seek advice about how best to protect your rights. The problems which arose may have been avoided had the architect expressly retained copyright in the drawings. However, each case is different and must be considered on its merits.