White SW Computer Law Intellectual Property, Information Technology & Telecommunications Newsletter - February 2009

Ordinarily, a company’s director cannot be sued directly for loss and damage arising from the actions of the company. However, accessorial liability can arise in relation to, amongst other things, copyright infringement, leaving the directors of the company exposed to a claim for damages.

In the matter of Autodesk Inc & Ors v Ginos Engineers Pty Ltd & Anor¹⁾ counsel for Autodesk submitted that accessorial liability for copyright infringement can arise in three ways:

• A person is a director of a small company, under his direct control, which commits a copyright infringement;
• A person “authorises” the infringement act; or
• A person shares a common design with a copyright infringer thereby rendering him 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, he can be liable for authorisation. It is not necessary that the director knew that the acts would infringe copyright.

Following a conversation with Ginos Engineers Pty Ltd’s (“GE”) information technology consultant and a subsequent audit of GE’s computers, an authorised reseller of Autodesk software confirmed that GE had reproduced multiple infringing copies of the Autodesk software.

The audit revealed two licensed copies of Autodesk’s software in addition to infringing copies which were reproductions of the whole or substantial parts of the Autodesk software.

The Court held that in a professional engineering practice which had expanded from operating two computers by the purchase of 11 new computers there must have been consideration of what software to use on the new computers.

Mr Ginos, GE’s director, gave evidence that he oversaw and approved all major purchases for GE.

The Court found that Mr Ginos was unable to avoid liability for authorisation and was therefore liable for infringing Autodesk’s copyright in the Autodesk software.

The Court determined that the proper measure of damages is the retail price that would have been paid to obtain the required software licences. The amount of compensatory damages, together with interest, amounted to $38,012.22.

The fact that GE had by the time of the hearing purchased software licences from an Autodesk re-seller, was held by the Court not to have addressed GE’s past use of different versions of the software over the previous 10 years.

In addition to the normal award of damages, the Copyright Act²⁾ empowers the Court to award additional damages for copyright infringements.

When determining whether to award such damages, the court considers:

• When determining whether to award such damages, the court considers:
• the flagrancy of the infringement; and
• the need to deter similar infringements of copyright; and
• the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff's copyright; and
• whether the infringement involved the conversion of a work or other subject matter from hardcopy or analogue form into a digital or other electronic machine readable form; and
• any benefit shown to have accrued to the defendant by reason of the infringement; and
• all other relevant matters;

The court found that by using the infringing copies of the software to provide professional services, GE had infringed Autodesk’s copyright with the intention of obtaining a financial benefit. As a result, the court decided to exercise its discretion and awarded additional damages of $76,000 against GE, noting that there need not be any proportionality between normal damages and any additional damages.

As Mr Ginos was found to be accessorily liable for GE’s copyright infringement, Autodesk would be entitled to demand payment of the awarded damages from Mr Ginos if GE failed to pay.

Whilst it was open to the Court to find that Mr Ginos was a joint copyright tortfeasor it made no finding in this regard – probably because it was not necessary to make such a finding in this case. However, all directors should be aware that if a common design is held in relation to any wrong (including copyright infringement) then liability may be found against the directors personally as well as the company.