Copyright: Authorising infringement - The Spantech decision

The High Court clarifies just what will amount to authorising a copyright infringement in the context of commissioning the manufacture of an article, in this case a building.

In the Spantech case, Heinz Wattie's Ltd ("Heinz Wattie") sought summary judgment against the plaintiff, Spantech Pty Ltd, and an order striking out certain claims for losses alleged to have been suffered by the plaintiff.

Background facts

Spantech had designed and built a number of potato storage installations for Heinz Wattie in 1998. In 1999, Heinz Wattie requested that Spantech submit an offer to build a further potato storage facility.

However, a significantly lower offer for the project was also submitted by BMP Contracts Ltd. Spantech was given the opportunity to lower its quoted price but refused to do so.

As a result, Heinz Wattie and BPM Contracts Ltd entered into a contract for the construction of the new potato storage facility. By letter, Heinz Wattie informed BMP Contracts Ltd that the specifications for the facility were to be "as per the adjacent potato stores" (i.e. the ones designed and constructed by Spantech).

Spantech's claim against Heinz Wattie was, in essence, that Heinz Wattie had authorised the infringement of its copyright in the designs of the potato storage installations it had built for Heinz Wattie in 1998.

Spantech alleged that Heinz Wattie infringed its copyright in the designs of its potato storage facilities by:

1. entering into the contract with BMP Contracts Ltd, and directing that the specifications of the relevant potato storage facility be "as per the existing adjacent potato stores"; and



2. assisting and approving the construction of the potato storage facility.

Spantech's pleading also included a claim for the consequential loss it alleged it had suffered as a result of Heinz Wattie's authorisation of the copyright infringement.

Heinz Wattie's arguments

On the question of whether it had "authorised" the infringement, Heinz Wattie argued (relying on the well-known case of CBS Songs Ltd v Amstrad Consumer Electronics Plc (1988) 11 IPR 1) that it had not authorised the infringement because there was no explicit or implicit grant of authority to BPM Contracts Ltd to copy the buildings Spantech had designed and in which it claimed copyright.

On the consequential losses that were alleged to have arisen out of Heinz Wattie's authorisation of the copyright infringement, Heinz Wattie asserted that Spantech's pleading gave no indication as to how the losses were connected to the alleged authorisation, that it was impossible to establish a causal connection between its alleged infringement and the damages claimed by Spantech and therefore the relevant parts of the pleading should be struck out.

Spantech's arguments

Spantech asserted that the term "authorise" in the copyright context means to "sanction, approve, and countenance". It argued that by contracting BPM Contracts Ltd to build the potato installation with "specifications as per the existing adjacent potato stores", Heinz Wattie had sanctioned, approved and countenanced the copyright infringement.

Spantech relied on Standen Ltd v Spalding & Sons Ltd [1984] FSR 554 in which Justice Falconer stated:

But I must say at this stage that it seems to me that where a dealer places with a manufacturer-supplier an order for the supply of a quantity of a particular article and the articles are made and supplied to that order, it is impossible to say that the dealer has not authorised the making of those articles. By placing the order he has approved and sanctioned their making; further his order has supplied the element of causation referred to by Kearney J in that passage I quoted from the R.S.A. case and the necessary element of control is present since he can place or withhold his order - in the words of Gibson J in the Moorhouse case, he has some power to prevent the making of the article in question.

Spantech contended that Standen Ltd v Spalding & Sons Ltd was authority for the proposition that a copyright infringement would be authorised in circumstances where the defendant asks another person to make something, the making of which amounts to a copyright infringement.

On the application to strike out that part of the pleading relating to its claims for the consequential losses, Spantech submitted that as it intended to file an amended statement of claim which would deal with the question of damages, the claims should not be struck out.

The decision

In his decision on Heinz Wattie's application for summary judgment, Associate Judge D. Gendall referred to the case of Pensher Security Door Co Ltd v Sunderland City Council [2000] RPC 249.

In that case, the English Court of Appeal held that a defendant who had commissioned another person to build a door, similar in appearance and materials to a door in which the plaintiff had copyright, had authorised the subsequent infringement. Counsel for the appellant made similar arguments to those put forward by counsel for Heinz Wattie in this case.

The English Court of Appeal, having considered the cases which defined the term "authorise", concluded:

A person who commissions another to produce a part, such as a spare part for a sugar beet harvester, does impliedly purport to grant him the right to make it and thus authorise its production. That is what happened in this case. The Council ordered Pensher PS 1000 doors. Nouveaux Products offered to make an alternative. The Council saw the design, knew that it was similar and approved the design and supply. I accept they never said "You can copy the Pensher door", but they commissioned the manufacture of a particular design of door, thereby sanctioning and impliedly purporting to grant the right to manufacture a door to that design. They had required Pensher PS 1000 doors and they authorised manufacture of an alternative.

In light of the striking similarity between the facts of the case before him and those in the Pensher case, Associate Judge Gendall was satisfied that it was clearly arguable that Heinz Wattie, in commissioning BPM Contracts Ltd to build a potato store with "specifications as per the existing adjacent potato stores", impliedly, at least, purported to grant it the right to manufacture a potato store to that design.

Accordingly, he was not satisfied that Heinz Wattie could establish that Spantech's claim was "clearly hopeless" or that it had a "clear answer to the plaintiff which could not be contradicted".

In relation to Heinz Wattie's application to strike out that part of the statement of claim relating to the alleged consequential losses suffered by Spantech, Associate Judge Gendall regarded the pleading to be deficient but capable of being repaired.

As Spantech was willing and intended to make the necessary amendments to its pleading, he was not prepared to take the significant step of striking out that part of the pleading. He also made reference to Whitman v Airways Corp of New Zealand Ltd which indicates that strike out applications which do not dispose of the entire case are generally inappropriate.

This case is significant as it clarifies just what conduct will amount to authorisation of copyright infringement. As can be seen from the result, it will be enough to sanction or impliedly purport to grant the right to manufacture an article where it is alleged that the manufacture of that article amounts to a copyright infringement.

Enquiries and information

For more information on copyright infringement, please email or call Garry Williams on 64 9 916 8661.