Australian gaming company, Aristocrat Technologies, brought legal proceedings against DAP Services (Kempsey) Pty Ltd where the courts grappled with issues of copyright infringement, qualification of damages, and the intricacies of proving loss. The case of Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd [2007] FCAFC 40 offers insights into intellectual property rights within the gaming industry and the challenges of quantifying damages in copyright infringement cases.
The Allegations
The Full Court of the Federal Court of Australia considered an appeal revolving around the requisite degree of certainty for an applicant to substantiate its loss in a claim for damages arising from copyright infringement. It was alleged that DAP Services trading as Vidtech produced over 600 perspex artwork panels for gaming machines that infringed Aristocrat’s copyrights. The court found evidence suggesting that DAP Services routinely copied Aristocrat’s software, particularly for creating “game kits” used in new machines or conversion kits for used machines.
The Court’s Findings
In this case, it was held that both the artwork and software copyright had been infringed, however, calculating damages proved challenging. While Aristocrat sought millions based on estimated lost sales, the court found its method of calculating damages was flawed and awarded only nominal damages to Aristocrat under section 115(2) of the Copyright Act. Nevertheless, the court acknowledged the flagrancy of DAP Services’ conduct, awarding $200,000 in additional damages under section 115(4) of the Copyright Act.
Key Takeaways
The court clarified the legal principles governing damages under section 115(2) of the Copyright Act, emphasising the need for an applicant to elect either damages or an account of profits before judgment. As additional damages are intended to punish and deter, additional damages may be awarded on principles corresponding to those governing awards of aggravated and exemplary damages at common law. In this instance, Aristocrat’s failure to prove the value of lost sales resulted in nominal damages. Additional damages under section 115(4) of the Copyright Act were increased by the appellate court after considering the benefit obtained by DAP Services and the need for deterrence. It is not uncommon for additional damages to be awarded which is greater than the standard licence fee generally payable.
The Aristocrat v DAP Services case exemplifies the intricate considerations in calculating damages for copyright infringement, shedding light on the interplay between compensatory and additional damages in the Australian legal framework.
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/
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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.