IP at Ashurst update implied terms
21 December 2022
21 December 2022
Mr Hardingham is a professional photographer and the sole director of Real Estate Marketing Australia Pty Ltd (REMA). REMA supplies photographs and floor plans of residential properties to real estate agencies, for use in the marketing of those properties for sale or lease. There was no written agreement between Mr Hardingham and REMA and the agencies.
Upon receipt of the photographs and floor plans, the real estate agencies would upload them to the realestate.com.au platform operated by Realestate.com.au (REA). REA then provided the images to RP Data Pty Ltd (RP Data), which provides a service called RP Data Professional. The images would appear on RP Data Professional within a few days of upload and remain on REA's platform and RP Data Professional after the completion of the sale or lease, including as part of the historical information about completed transactions.
Mr Hardingham and REMA brought proceedings in the Federal Court, claiming copyright infringement under s 36 of the Copyright Act 1968 (Cth) against RP Data.
The primary judge found that there was an implied term that that the agencies were authorised to sub-licence the works to REA on REA's usual terms and conditions. This included an authorisation for REA to grant a sub-licence to RP Data. Accordingly, the primary judge held that Mr Hardingham and REMA's copyright was not infringed. Read our article on the first instance decision in the 30 March 2020 edition of IP@Ashurst.
The majority of the Full Court allowed Mr Hardingham and REMA's appeal and found that there was no implied term. The Full Court found that actual knowledge of the precise scope of the term was required because of the gravity of REA's terms and conditions.
The key issue in this case was whether the contract between REMA and the agencies authorised the agencies to agree to REA's standard terms and conditions and provide the relevant sub-licence to REA. Mr Hardingham and REMA contended that the licence granted to the real estate agencies permitted the agencies to grant a sub-licence that was subject to a limitation: it would come to an end once the marketing of the property had ended ie. a sale or lease of the property had been completed.
The High Court determined that there was an implied term in the licence permitting the agencies to sub-licence the photographs and floor plans to REA.
In this case, the terms of the agreement had not been articulated. According to Chief Justice Kiefel and Justice Gageler, the ultimate question when determining what the relevant agreement was is "what reasonable people with knowledge of the background circumstances then known to both parties would be taken by their words and conduct to have agreed." They provided useful guidance on the relevant considerations when implying terms and determining the scope of a licence:
Mr Hardingham, REMA and the agencies dealt with each other in an industry where the marketing for sale or lease of residential properties were done in a particular way. Chief Justice Kiefel and Justice Gageler found that the following industry practices were relevant to the question of the parties' mutual understanding:
Chief Justice Kiefel and Justice Gageler also emphasised that terms of the agreement may be inferred from the silence of the parties as this may evidence a tacit understanding. Mr Hardingham and REMA's silence when they knew what REA and RP Data did with the images, and for how long they continued to use them, is consistent with an acceptance of what was necessary to achieve the intended marketing. This conduct led the agencies to believe that Mr Hardingham and REMA knew and accepted the usage of the images and that it could only be achieved if the agencies submitted to REA's terms to upload the images to its platform.
This case highlights the importance of applying the "proper" inquiry when inferring implied terms. The initial inquiry is to identify what a reasonable person would conclude were the terms of the bargain based on what the parties said and did, understood in light of what they knew. Relevant considerations can include industry practice, a party's silence over the course of dealings, and the parties' commercial aims and expectations. It is important to first identify the terms, before applying the criteria in BP Refinery.