Hear see and speak no infringement The danger of indifference
23 August 2022
23 August 2022
Mr Semmens was a software developer who created a software program called "DreamDesk". DreamDesk was subsequently bought by (or came to be owned by) Campaigntrack.
Mr Semmens was then engaged by a real estate agency, Biggin & Scott (B&S), to develop a software system with similar functionality to DreamDesk. B&S, through its directors, had allegedly made clear to Mr Semmens that he was not permitted to, and should not, copy any DreamDesk source code, or copyright materials in creating the new system (referred to as Toolbox). A new company named Real Estate Tool Box Pty Ltd was set up to commercialise the new Toolbox software.
Campaigntrack commenced proceedings against Mr Semmens, Real Estate Tool Box, B&S and two directors of Real Estate Tool Box and B&S (Ms Bartels and Mr Stoner) for infringement of copyright in the DreamDesk software and authorising infringement of copyright.
At first instance, Justice Thawley found that Mr Semmens had infringed Campaigntrack's copyright in DreamDesk and had also authorised infringing acts by both developers and users. However, the remaining respondents (the B&S Respondents) were found not to have infringed copyright directly and not to have authorised any infringement.
Justice Thawley concluded that:
Campaigntrack appealed, arguing that Justice Thawley was wrong to conclude that the B&S Respondents had not authorised the copyright infringement.
The Full Federal Court was split, with Justices Greenwood and McElwaine in agreement, and Justice Cheeseman dissenting.
Justices Greenwood and McElwaine found that by adopting a position of indifference, the B&S Respondents authorised infringements of the copyright in the DreamDesk works by the users of Toolbox. Justice Cheeseman disagreed with this finding concluding that no error was made by the primary judge, Justice Thawley and that it was open to him to conclude that there was no authorisation by indifference.
The majority agreed with Justice Thawley that, prior to 29 September 2016, the B&S Respondents had not authorised Mr Semmens' infringing conduct. However, the majority found that there was a critical turning point on 29 September when Campaigntrack's lawyers sent a letter to the B&S Respondents advising them that there appeared to have been improper access and duplication of code owned by Campaigntrack.
In these circumstances, the majority concluded that the B&S Respondents were on notice of the potential infringing conduct. It was not sufficient to continue to trust Mr Semmens' representations in this context. They could have:
However, the B&S Respondents did not take any of these steps.
The majority stated that although knowledge of the authorised acts is a relevant requirement for authorisation, "inactivity, indifference, or wilful blindness may be of such character and degree as to infer knowledge and conclude authorisation".
This decision makes clear that, once on notice of potentially infringing conduct, it is imperative to act with diligence so as to avoid authorising that conduct.
When faced with third party concerns, it is not sufficient to rely on warranties or representations as to non-infringement. Investigations should be undertaken and legal advice should be sought expeditiously.
While authorisation typically requires knowledge of the conduct that amounts to infringement (that is, it is not necessary to be aware that the conduct is infringing, it is enough if the conduct is known), there may be a finding of indifference or wilful blindness if, once put on notice, no action is taken to test the veracity of the third party claims.
For intellectual property rights owners, this decision highlights the importance of putting potentially infringing parties on early notice of concerns about their actions, provided that there is a sufficient basis to do so. By adopting this approach, it may be possible to obtain a finding of authorisation of infringement against additional respondents that were otherwise unaware of the infringing conduct.
Authors: Nina Fitzgerald, Partner and Ben Parry, Lawyer