The case of Autodesk Australia Pty Ltd v Cheung (1990) 94 ALR 472 showcases the challenges surrounding copyright infringement claims, specifically in computer software. This landmark case unfolded in the Federal Court of Australia, with Autodesk Inc as the second applicant (a renowned creator of computer programs) distributed in Australia through its subsidiary, Autodesk Australia Pty Ltd, the first applicant. The respondent, Charles Cheung, admitted to infringing the applicants’ copyright, prompting the court to focus on the quantum of damages owed.
The Genesis of the Dispute: Uncovering Infringements
The proceeding commenced in October 1987 when HST Technology Pty Limited, an unrelated software company, received information suggesting that Mr Cheung supplied pirated copies of computer programs to customers. Acting on this tip, an undercover operation was orchestrated, culminating in a revelation of Mr Cheung’s infringement of Autodesk’s software, including the program “AutoCAD”. Mr Cheung, in an illicit fashion, offered pirated software as a “bonus-package” to potential customers free of charge.
Search and Discovery: Unravelling the Extent of Infringement
Following a court-authorised search, 14 instances of Autodesk’s AutoCAD program were found and confiscated from Mr Cheung’s premises. This discovery revealed that the infringements extended over multiple versions of the program, dating back to 1983. The court had to grapple with the challenge of determining compensatory damages for the infringement.
Quantum of Damages: A Complex Calculation
Section 115 of the Copyright Act 1968 (Cth) (the Act) formed the legal framework for assessing damages. The court delved into the intricacies of calculating compensatory damages, considering the license fees ordinarily payable to the applicants by dealers. The “license fee” approach, a method often applied in copyright cases, was utilised to estimate the financial loss suffered by the applicants due to the infringement. However, further considerations had to be considered for commercial realities, and discounting the claimed damages to reflect likely scenarios.
Additional Damages: Penalising Flagrant Infringement
Section 115(4) of the Act introduces the concept of additional damages, allowing the court to consider the flagrancy of the infringement, benefits accrued to the infringer, and other relevant factors.
The court expressed in the judgment that s 115 (4) of the Act takes an “unusual form”. Specifically, it does not mandate the demonstration of specific facts, rather, if the court deems it appropriate, it may award additional damages after considering certain factors, one of which is “the flagrancy of the infringement”. Similar paragraphs in statutes overseas have been interpreted to require evidence of flagrant conduct, as demonstrated in cases such as Ravenscroft v Herbert (1980) RPC 193 and Wellington Newspapers Ltd v Dealers Guide Ltd (1984) 4 IPR 417. While not definitively decided, for the purposes of this case, Wilcox J was content to consider the acts and conduct and determined Mr Cheung had acted with flagrancy, which was further compounded when having consideration to Mr Cheung’s refusal to cooperate in providing information.
The Verdict: A Substantial Award Reflecting the Gravity of Infringement
In a comprehensive judgment, the court awarded compensatory damages of $15,000, distributed between Autodesk Australia and Autodesk Inc. Additionally, substantial additional damages totalling $35,000 were granted, emphasising the flagrancy of Mr Cheung’s infringement. The total award of $50,000 underscored the court’s recognition of the gravity of copyright infringements in the field of computer software.
Key Takeaways
Additional damages are often awarded in cases where compensatory damages are insufficient to redress the wrong suffered by the copyright holder. Further, additional damages are an independent relief, although the amount awarded may be influenced by the amount of any compensatory damages that are awarded.
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.