On 22 January 2018, Justice Martino of the Supreme Court of Western Australia delivered his judgment in the case of Milankov Designs & Project Management Pty Ltd v Di Latte & Anor, a copyright infringement case in respect of house plans.

Mr and Mrs Di Latte engaged the plaintiff, Milankov Designs & Project Management Pty Ltd (Milankov), to design and prepare drawings for a home to be built at the Di Lattes’ property.  The agreement provided that Milankov would prepare plans for stages of the design and build process – first, the development stage and, second, the construction drawing stage. The Di Lattes agreed to pay Milankov a percentage of the build cost, to be billed to the Di Lattes at various stages throughout the process.

After Milankov had prepared the stage one plans (including plans submitted to council for building licence approval) and the Di Lattes had paid several invoices issued by Milankov, the relationship between the parties broke down.  The engagement contract was terminated by the Di Lattes, and Milankov promptly wrote to the Di Lattes putting them on notice that Milankov owned copyright in the plans it had created and that the Di Lattes were not entitled to reproduce the plans without its permission, including by building the house at their property.

Nonetheless, the Di Lattes proceeded to engage an architect to create plans including construction drawings by copying Milankov’s plans, and then to construct a house in accordance with the design.

Milankov commenced proceedings for copyright infringement against the Di Lattes and the architect. The Di Lattes admitted that Milankov owned copyright in the plans and that they had used the plans to proceed with the build, but argued that they were entitled to do so. The Di Lattes claimed that their agreement with Milankov contained an implied term that allowed the plans to be used by them in order to construct the house at their property.  The architect claimed that if he had infringed Milankov’s copyright, he was an “innocent infringer” (and so not liable to pay damages) as he believed the Di Lattes were entitled to authorise him to use the plans.

Justice Martino rejected these defences and found that Milankov owned copyright in the plans it had created and that the Di Lattes and the architect had infringed that copyright by creating or authorising the creation of the construction drawings and the Di Lattes’ house.  His Honour found that there was no implied licence in the agreement between the Di Lattes and Milankov to use the plans for this purpose.  His Honour referred to authorities which establish the general rules that:

• contracts between an architect or house designer and client/ owner are a class of contracts into which such a licence is implied unless such a licence is excluded by an express term or is inconsistent with the terms of the agreement; and
• the implied licence extends so as to enable parties such as builders, architects or draftspeople engaged by the client/ owner to make copies of the plans and to use them to construct a building at the relevant property.

In this case, his Honour found that whilst the contract did not contain an express term excluding the implied licence, the implied licence was inconsistent terms with the contract. In particular, it could not be implied that the Di Lattes were licenced to use the stage one drawings for the purpose of engaging a third party to create construction drawings to build a house given that the contract stated that Milankov would prepare the construction drawings.

His Honour found that the architect’s defence of “innocent infringement” was not made out as the architect did not have a reasonable basis for believing that the Di Lattes were entitled to authorise him to reproduce the plans. The architect knew the plans were created by a third party subject to an agreement and, whilst he had asked the Di Lattes about the terms of that agreement, he never asked to (and did not) actually see the agreement.

The defendants were ordered to pay Milankov almost AUD160,000 in compensatory damages, being the amount that Milankov would have earned if it had continued with creating the stage two drawings for the build under the agreement.

This case serves as a warning to builders, architects and draftspeople, as well as customers. The decision is a reminder of the risks involved in referring to another’s work when creating house plans or building a house, even when those plans were created for the same customer.  The case also highlights the issue of implied licences that run with building plans. In this case Milankov was fortunate, but best practice for builders and designers is to have their customer agreements reviewed by a lawyer to ensure that these contain an express exclusion of the implied licence.  If not, circumstances can arise where copyright owners are not paid for their work and are helpless to stop further reproduction.