Real Estate Tool Box Pty Ltd v Campaigntrack Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: Gageler CJ,Gordon,Edelman,Steward,Jagot JJ
• Judgment Date: 06 December 2023
• Neutral Citation: [2023] HCA 38
• Year: 2023
• Court: High Court
• Docket Number: S16/2023

Real Estate Tool Box Pty Ltd & Ors

Appellants

and

Campaigntrack Pty Ltd & Anor

Respondents

[2023] HCA 38

Gageler CJ, Gordon, Edelman, Steward AND Jagot JJ

S16/2023

HIGH COURT OF AUSTRALIA

Copyright — Infringement — Authorisation of infringement — Where s 36(1) of Copyright Act 1968 (Cth) relevantly provides copyright is infringed by person who, not being owner of copyright, and without licence of owner of copyright, “authorizes the doing in Australia” of any act comprised in copyright — Where first respondent owner of copyright in cloud-based real estate marketing system “DreamDesk” — Where fifth appellant (“Mr Stoner”) director of second appellant (“Biggin & Scott”) — Where Mr Stoner instructed second respondent (“Mr Semmens”) to build web to print delivery system software that does not breach other companies' copyright — Where Mr Semmens and others developed “Real Estate Tool Box” software (“Toolbox”) — Where Mr Stoner and sixth appellant (“Ms Bartels”) established first appellant (“Real Estate Tool Box Pty Ltd”) — Where Mr Semmens reproduced “DreamDesk Source Code Works”, “DreamDesk Database and Table Works” and “DreamDesk PDF Works” in creating Toolbox — Where use of Toolbox involved reproduction of DreamDesk Source Code Works — Whether Biggin & Scott, Mr Stoner, Ms Bartels and Real Estate Tool Box Pty Ltd (“Biggin & Scott parties”) infringed copyright in DreamDesk Source Code Works by authorising infringing acts of Mr Semmens and others in developing Toolbox and of users in using Toolbox — Whether Biggin & Scott parties infringed copyright in DreamDesk Database and Table Works by authorising infringing acts of Mr Semmens and of users in using Toolbox.

Copyright — Infringement — Authorisation of infringement — Where Toolbox developed at third appellant's (“Dream Desk Pty Ltd”) premises — Where fourth appellant (“Mr Meissner”) sole director and shareholder of Dream Desk Pty Ltd — Where Dream Desk Pty Ltd staff assisted Toolbox development — Where DreamDesk Pty Ltd and Mr Meissner (“DDPL parties”) participated in Toolbox development — Whether DDPL parties infringed copyright in DreamDesk Database and Table Works and DreamDesk PDF Works by authorising infringing acts of Mr Semmens.

Words and phrases — “any act comprised in the copyright”, “authorisation”, “duty of control”, “indifference”, “infringement of copyright”, “intellectual property”, “nature of any relationship”, “on notice of copyright infringement”, “permission”, “power to prevent”, “reason to suspect”, “reasonable person”, “reasonable steps to prevent or avoid”, “sanction, approve, countenance”.

Copyright Act 1968 (Cth), ss 36(1), 36(1A).

Representation

B W Walker SC with H P T Bevan SC and J E McKenzie for the appellants (instructed by Mills Oakley)

M Green SC with W H Wu for the first respondent (instructed by McLean & Associates Solicitors)

No appearance for the second respondent

ORDER

• 1. Appeal allowed.

• 2. Set aside the orders made by the Full Court of the Federal Court of Australia on 6 July 2022 and 19 July 2022, and, in lieu thereof, order that the appeal be dismissed with costs.

• 3. The first respondent pay the appellants' costs of the appeal to this Court.

On appeal from the Federal Court of Australia

1 Gageler CJ, Gordon, Edelman, Steward AND Jagot JJ. This appeal deals with a person's liability for infringing copyright under s 36(1) of the Copyright Act 1968 (Cth) by “authorising” the doing by another person of any act comprised in the copyright.

2 Mr Semmens (the second respondent) is a software developer who infringed copyright in software called “Process 55” when he helped create a cloud-based real estate marketing system named “DreamDesk”. Since 2015, DreamDesk had been used by a real estate agency known as Biggin & Scott Corporate Pty Ltd (“Biggin & Scott”) (the second appellant) under a licence conferred by Dream Desk Pty Ltd (“DDPL”) (the third appellant). Prior to that, Biggin & Scott had used a competing platform called “Campaigntrack”.

3 Following Mr Semmens' admitting in 2016 to the infringement of copyright, DDPL sold DreamDesk to Campaigntrack Pty Ltd (“Campaigntrack P/L”) (the first respondent). Campaigntrack P/L purchased the rights in both DreamDesk and Process 55 in order to shut down DreamDesk and to persuade customers to move or return to Campaigntrack.

4 Biggin & Scott did not want to return to Campaigntrack. Mr Stoner (the fifth appellant), a director of Biggin & Scott, instructed Mr Semmens “to build a web to print delivery system that does not breach any other companies IP or ownership”. This led to the development of the “Real Estate Tool Box” software (“Toolbox”) and the incorporation of Real Estate Tool Box Pty Ltd (“RETB”) (the first appellant).

5 Mr Stoner constantly sought assurances from Mr Semmens that he had complied with his instructions in creating Toolbox. However, unbeknownst to Biggin & Scott, Mr Stoner and others, in developing Toolbox Mr Semmens (and developers working under his supervision) had in fact infringed copyright in DreamDesk, now owned by Campaigntrack P/L. Mr Semmens had reproduced the whole or parts of the “DreamDesk Source Code Works”, “DreamDesk Database and Table Works” and “DreamDesk PDF Works” in creating Toolbox. Moreover, the use thereafter of Toolbox involved a reproduction of a substantial part of the DreamDesk Source Code Works.

6 On appeal to this Court, there was no dispute that Campaigntrack P/L's copyright in DreamDesk had been infringed by Mr Semmens developing Toolbox and by users of Toolbox, in the ways just described.1 At issue were the findings by a majority of the Full Court of the Federal Court of Australia that the appellants had infringed the copyright of Campaigntrack P/L by “authorising” the infringing acts of Mr Semmens and others. In this respect, the appellants broadly fell into two groups. Campaigntrack P/L made different allegations of infringement of copyright against the two groups.

7 The first group, “the Biggin & Scott parties”, comprised Biggin & Scott, the franchisor of Biggin & Scott real estate agencies in Victoria; two directors of that company, namely Mr Stoner and Ms Bartels (the latter, the sixth appellant); and RETB. RETB had been established by Mr Stoner and Ms Bartels as the corporate trustee of a unit trust (“the RETB Unit Trust”) probably formed to own Toolbox. The issue in this Court was whether the Biggin & Scott parties: (i) infringed the copyright in the DreamDesk Source Code Works 2 by authorising the infringing acts of Mr Semmens and others in developing Toolbox and of users in using Toolbox; and (ii) infringed the copyright in the DreamDesk Database and Table Works 3 by authorising the infringing acts of Mr Semmens and of users in using Toolbox.

8 The second group, “the DDPL parties”, comprised DDPL and its sole director and shareholder, Mr Meissner (the fourth appellant). Some of the details were unclear concerning the relationship between the Biggin & Scott parties, on the one hand, and the DDPL parties, on the other. But it is clear that in early 2015, DDPL was incorporated, inferentially by Mr Meissner, and that Mr Meissner held all the shares in DDPL. Mr Meissner also ran an advertising business through JGM Advertising Pty Ltd (“JGM”). The issue in this Court was whether the DDPL

parties infringed the copyright in the DreamDesk Database and Table Works and the DreamDesk PDF Works 4 by authorising the infringing acts of Mr Semmens

9 Although the acts that were allegedly authorised were different for the two groups, as explained below there were limited factual findings at trial that were relevant to these different acts. Moreover, the nature of the case against the appellants also changed on appeal. In that light, it is necessary in these reasons generally to address the questions of alleged authorisation at the level of the development of Toolbox. At that higher level of generality, the issues for determination on this appeal are whether the appellants had “authorised” those infringing acts within the meaning of s 36(1) of the Copyright Act.

10 For the reasons given below, none of the appellants authorised the acts comprising the infringement of copyright. The appeal should be allowed.

The development of DreamDesk and Toolbox

11 Whether a person has authorised an infringing act within the meaning of s 36(1) of the Copyright Act will depend upon the proper inference to be drawn from all of the facts of the case.5 It is therefore necessary to set out those facts in some detail.

Development of DreamDesk

12 In late 2014, Mr Semmens, and his business partner Mr Ewart, met Mr Meissner. They wanted Mr Meissner to invest in a new cloud-based real estate marketing system they proposed to develop. This was DreamDesk. They subsequently agreed to form a company. Upon recoupment of Mr Meissner's initial investment, the original plan was for the shares in DDPL, incorporated in 2015, to be held as to 40% each by Mr Semmens and Mr Ewart with the balance held by Mr Meissner. As matters eventuated, Mr Meissner remained at all times the sole shareholder in DDPL. The details of this arrangement remain unclear. However,

the primary judge found that Mr Semmens became an independent contractor of DDPL whilst he worked on developing DreamDesk

13 In the first half of 2015, Mr Ewart approached Mr Stoner and persuaded him to have Biggin & Scott move to using DreamDesk. In the past, Biggin & Scott had been a user of Campaigntrack. On 20 May 2015, a licence agreement was entered into between Biggin & Scott and DDPL, and on 17 August 2015 Biggin & Scott went “live” with the DreamDesk platform.

Mr Semmens admits infringement of copyright

14 In May 2016, Mr Semmens admitted that he had copied a web-based real estate marketing system, called “Process 55”, when he developed DreamDesk. At that time, the intellectual property comprising Process 55 was owned...