In 2009, the Federal Magistrates Court of Australia heard the case between Autodesk Inc. and its related entities (Autodesk) and Ginos Engineers Pty Ltd (GE) and its director, Mr Zisis Ginos (Ginos), for alleged copyright infringement involving Autodesk’s popular engineering software, AutoCAD.
Unlicensed Copies Discovered During Audit
The issue stemmed from the discovery of 27 unlicensed copies of Autodesk software at GE’s premises in 2006. Authorised reseller, Michael Kelly, initially encountered difficulties conducting an audit, but further investigation confirmed the presence of infringing copies.
Lawsuit Filed, Damages Sought
Despite attempts to reach a settlement through correspondence, Autodesk sought legal recourse by filing a claim for damages and injunctive relief. GE also initiated separate proceedings against Autodesk Australia, which were ultimately dismissed.
Key Issues and Arguments
The central issues centred around Mr Ginos’ potential liability for copyright infringement; the calculation of appropriate damages for Autodesk; and whether additional damages under the Copyright Act were warranted.
Autodesk argued that Mr Ginos, as a director of GE, could be held accessorial liability for copyright infringement in three ways:
- As a controlling mind of the company, Mr Ginos was allegedly responsible for ensuring software licensing compliance.
- Even if not directly involved, Mr Ginos was accused of authorising or procuring the infringing acts through his control over GE.
- By allowing the continued use of unlicensed software, Mr Ginos was considered a joint tortfeasor in the infringement.
GE, on the other hand, maintained Mr Ginos’ computer illiteracy and reliance on staff for software procurement. It was argued that the copying occurred gradually over time and that the 1997 software was obtained as a replacement, not an unauthorised copy. Additionally, they questioned the clarity of the licensing agreement and emphasised the absence of deliberate wrongdoing.
Evidence and Submissions
The case relied on affidavits from both parties, exhibits like photographs and software, and a draft Statement of Agreed Facts with remaining disagreements outlined in a “Consideration” section.
Autodesk emphasised Mr Ginos’ control over GE as a small company with only three shareholders and submitted that he had the ability to prevent the infringement but did not, and therefore, he should be held personally liable.
GE challenged the reliability of determining compliance solely through software installations, highlighting the lack of evidence concerning Mr Ginos’ access or understanding of serial numbers. GE further criticised Autodesk’s lack of access to a crucial internal database and questioned Mr Kelly’s potential knowledge of GE’s compliance issues.
The Court’s Decision
Ultimately, the court found Mr Ginos liable for copyright infringement based on his role as a director and his capacity to prevent the unauthorised use of software, and failure to do so.
Compensatory damages were awarded to Autodesk based on the retail price of the required licenses. Furthermore, the court granted additional damages under section 115(4) of the Copyright Act, considering factors like the flagrancy of the infringement and the need for deterrence, and the benefits accrued by GE.
Key Takeaways
Accessorial liability for copyright infringement can arise in three ways:
- A person is a director of a small company that is under the director’s direct control which commits a copyright infringement and steps are not taken to stop or prevent the infringement;
- A person “authorises” the infringement act; or
- A person shares a common design with a copyright infringer thereby rendering that person a joint tortfeasor in that infringement.
The Federal Magistrates’ Court held that as long as a director knew of the acts himself or that it would be likely that the acts occurred, a director can be liable for authorisation and it is not necessary that the director knew that the acts would infringe copyright.
Further, when calculating damages, the damages are based on the licence fee generally payable for receiving authorisation in the form of a licence to use the copyright material at the retail, not the wholesale price.
If you act in the licencing enforcement and compliance team and require more information, or if you have infringed upon copyright material, please contact our office for a free consultation at (02) 9262 5495, or subscribe to our newsletter by visiting https://mclp.com.au/publications/
About Us
MCLP acts for nearly a dozen software providers to protect their copyright material. Led by Damin Murdock and supported by Ms Jane Choi, Ms Bella Chang and Shiqi Cui, our team operates internationally and can deal with intellectual property matters in English, Mandarin, Cantonese, Japanese and Malay In the past few years, our team has recovered more than $3 million for our clients.