Copyright Owners Keep on Trucking

In most intellectual property litigation in Australia, an order is made at a relatively early stage that issues of liability be determined separately from and prior to issues of quantum of any relief. While there are good reasons for the making of such an order, it does mean that a finding that a valid IP right has been infringed often means the battle is only half won.

Krueger Transport Equipment Pty Ltd v Glen Cameron Storage & Distribution Pty Ltd (No 2) [2008] FCA 1493 addresses the question of pecuniary relief following a finding of liability for copyright infringement.

The Fourth Respondent, Vawdrey, had been found to have infringed copyright owned by Krueger in certain drawings for a truck load restraint system. Krueger sought damages under s 115(2) of the Copyright Act as well as additional damages under s 115(4). In response, Vawdrey’s primary submission, in reliance on s 115(3), was that it was not liable to pay any damages because it was an innocent infringer. Vawdrey had not directly copied the drawings of Krueger, but had done so indirectly by following instructions given by the First Respondent, Camerons.

Gordon J noted that Vawdrey bore the onus of proving its innocence and that if it intended to rely on s 115(3) “it had to lead evidence to establish that, at the time of the infringement of Krueger’s copyright, it was not aware of and had no reasonable grounds for suspecting that the act constituting the infringement was an infringement.” In the circumstances, Vawdrey’s failure to make any inquiries about the source of Cameron’s instructions was found to preclude a finding of innocence.

On the quantification of damages, Vawdrey’s submission that it was only liable for lost profits on the load restraint systems themselves, rather than on the entire trailers incorporating such systems, was rejected. As Gordon J noted “Any loss related to non-copyright items is recoverable where it is a foreseeable consequence of the infringement.” Having considered the competing methodologies for calculating lost profits, as presented by various expert witnesses, Gordon J awarded damages in the amount of $346,449 for lost profits. A further amount of $10,000 was awarded for lost goodwill.

Finally, Gordon J considered Krueger’s claim for additional damages, finding that “while Vawdrey’s infringement was not the most flagrant it was also not innocent”, noting in particular the failure to make reasonable inquiries as to the provenance of Camerons’ instructions. Also taken into account was the need to deter conduct of the type engaged in by Vawdrey, and the benefit which accrued to it by that conduct, with $30,000 in additional damages being awarded.