COPYRIGHT LAW

Alex McDonald is an Auckland intellectual property law barrister experienced in handling copyright infringement cases

WHAT IS COPYRIGHT?

In New Zealand copyright is a right which is automatically given to the creator of one of the types of works specified in the Copyright Act 1994. To get copyright protection there is no need to register the work. This means that unlike patents, trade marks and registered designs, there is no register for recording or checking whether copyright exists in a work.

The requirements for copyright to exist are straightforward.  A work in one of the categories outlined in section 14 needs to have been created.  It needs to be in material form and it needs to be original.

For the work to be original that simply means that the work needs to be independently created, as opposed to having been copied from a pre-existing work, and it needs to have been created using some level of skill, judgment and effort.  The work doesn’t have to be novel or unique but there needs to be some effort and skill spent in producing the work.  The trade-off is that the less skill and effort used in producing the work the lower the scope of protection for the work.

There is no requirement for artistic merit. Therefore the New Zealand Courts recognise copyright in the drawings of a toilet pan, a vegetable grader, a pregnancy kit and numerous other products.

WHAT TYPES OF WORK ARE PROTECTED BY COPYRIGHT?

Section 14 of the Copyright Act 1994 says that copyright exists in the following original works:

  • Literary, dramatic, musical or artistic works;
  • Sound recordings;
  • Films;
  • Communication works;
  • Typographical arrangements of published editions

The two main categories are literary and artistic works.

For literary works, copyright protects the selection and arrangement of the words.  Copyright in product design protects the look of the product.

As a general rule copyright protects the expression of ideas but not the underlying general idea.  So for example anyone can write a story based on the idea of a princess held captive in a castle, but text or illustrations from other books about the same subject will, unless they were written decades ago, be protected against copying by copyright.

In the commercial world, copyright in New Zealand can be a powerful tool for manufacturers to use against knock offs of their products.

WHAT DOES THE COPYRIGHT SYMBOL MEAN?

The copyright symbol © is a symbol used by manufacturers to tell the market and competitors that the product which has the symbol is protected by copyright. Best practice is to use the copyright symbol © followed by the name of the copyright owner and the date when the work was produced.

Using the copyright symbol © also limits the availability of the defence of innocence in a copyright infringement situation.

HOW LONG DOES COPYRIGHT LAST FOR?

In New Zealand different types of work have different lengths of time for which copyright lasts.  The table below explains how.

Work Literary, Dramatic, Musical Work Artistic Work Industrially applied artistic work Work of artistic craftsmanship
Duration Life of the author plus 50 years Life of the author plus 50 years 16 years from the making of more than 50 copies of the work in 3 dimensions for sale or hire 25 years from when the work was made

 

The important point for manufacturing businesses is that copyright in industrially applied or mass produced designs lasts for 16 years from the date at which 50 copies of the design were reproduced.  So businesses that have been mass producing a product for more than 16 years will no longer have any copyright protection for the product design and other people are free to copy those designs.

But here’s the catch, if the design has been registered as a shape trade mark by the owner of the design, the owner will obtain enduring exclusive rights under the Trade Marks Act to reproduce the design.

WHO OWNS COPYRIGHT?

The first owner of copyright is generally the person who drew the work or otherwise authored it.  There are two exceptions to that rule:

  • The first is for works made in the course of employment. In that case the employer owns the work;
  • The second relates to commissioned work (explained below).

Where someone commissions and agrees to pay for a photograph, computer program, painting, drawing, diagram, map, chart, plan, engraving, model, sculpture, film or sound recording, the commissioner (not the creator) will own copyright in the work unless there is some written agreement to the contrary.

The fact that literary works are not covered by the commissioning rule is important. It means that a company that commissions, say, the creation of some software (which is a literary work) will not automatically own the underlying copyright in the software.  There needs to be a separate written agreement that provides that the business paying for the software will not only receive the software in tangible form, but will also own the underlying copyright.

HOW CAN I TRANSFER OWNERSHIP OF COPYRIGHT TO SOMEONE ELSE?

The Copyright Act 1994 (s 114) says that for copyright to be transferred by an assignment, the assignment must be in writing and be signed by or on behalf of the owner of the copyright. Therefore for a purchaser who wants to buy a business including copyright rights best practice is for the sale and purchase agreement to specifically refer to copyright.

HOW IS COPYRIGHT LICENSED?

Owning copyright enables the owner to control how the copyright is used.  Someone who wants to use another person’s copyright material in the business must normally get a licence from the owner. Typically a person obtaining a copyright licence to use copyright works will be required to pay royalties.

WHAT IS COPYRIGHT INFRINGEMENT?

The thrust of copyright law is to stop others from copying the work without permission. There is an important distinction between two types of infringement:

  • Primary infringement; and
  • Secondary infringement

Primary infringement is where an infringer has copied a copyright work. Typically this is where the infringer manufactures a product which copies the design of someone else’s product.

Secondary infringement is where the infringing company has not made the infringing product itself but typically has imported it from overseas, often not knowing that it is an infringing product.  If the importation was innocent (the importer did not know or did not have reason to believe that the product was infringing) then the copyright owner will only be entitled damages from the time the importer is made aware of the copyright works. A plaintiff may still obtain an account of net profits from an innocent infringer and is still entitled to an injunction to restrain further sales of infringing product.

IF SOMEONE INFRINGES MY COPYRIGHT WHAT CAN I DO?

If you think that someone has infringed your copyright the first step is usually to get some legal advice to make sure that you have correctly understood the situation and your rights. The next step would usually be to see if you can resolve the issue by agreement.

When clients have engaged me on copyright infringement matters I would usually write a formal cease-and-desist letter to the other side. If the case concerned a lookalike product I would generally require the other side to comply with certain demands by a fixed date. This would commonly include delivery up of the infringing product; payment of damages or profits on the sale of infringing product and the payment of legal costs.

If the cease-and-desist letter approach was unsuccessful then court proceedings could be considered along with mediation. Where there is an urgent need to bring the case before the Court, generally because serious damage is being caused in the market, an application for an interim injunction to halt the sale of the infringing product may be the best approach.

WHAT DO I NEED TO DO TO PROVE COPYRIGHT INFRINGEMENT?

There are three aspects to proving copyright infringement.

First, the infringing work needs to be objectively similar.  It needs to look like it is a copy of the copyright work.  There needs to be a resemblance between the two.  The Court is looking for striking similarities.  Care needs to be taken in assessing objective similarity where the copyright work is not particularly original. This might be because the design of the product is commonplace or because its form is dictated by function or industry standards.

Secondly, there needs to be “a causal connection”.  Because direct evidence of actual copying is often hard to come by Courts will look to the facts which suggest that it is more likely than not that the design of the defendant’s product is derived from the copyright work or the copyright work was the starting point for the design.  The infringer does not need to have seen the actual original drawings.  The fact that the copyright owner’s product is available on the market and was accessible to the infringer can be sufficient.

Thirdly, a substantial part of the copyright work needs to have been taken.  The Court focuses on quality not quantity.  The Court will look for ‘fingerprints’ of copying.  Often the designer of the copyright work will be able to describe how there were aspects of the design that could be improved or were design ‘mistakes’ or peculiarities that were the result of trial and error and that these have been reproduced in the infringing copy.

The Court will be particularly interested in any evidence, or, the absence of evidence, of a credible independent design path by the infringer. Usually it will be fatal to any defence if the drawings that a defendant has to produce under discovery show that it started the design process with the copyright owner’s product and simply made minor changes so that the two products did not look identical.

IF I PROVE COPYRIGHT INFRINGEMENT WHAT CAN I EXPECT TO RECOVER?

Where someone has infringed your copyright by copying, for example, design of a product which you manufacture the infringer will be required to pay either, at your option, your damages or the infringer’s profits.

Damages are usually calculated according to the amount of money the copyright owner has lost in sales as a result of sales of the infringing product and sometimes damage to product reputation.

As an alternative, copyright owners are entitled to seek an account of profits. This means that the infringer will be liable to pay the net profit made by the infringer on sales of the infringing product.

The copyright owner can also be entitled to flagrancy damages if the infringement was a blatant attempt to make use of the owner’s copyright. This means that the monetary consequence for copyright infringement can be very significant.

IS THERE A DEFENCE OF INNOCENCE IN COPYRIGHT INFRINGEMENT CASES?

A limited defence of innocence is available in copyright infringement cases where the infringer can show that he or she had no grounds for suspecting that the act constituted infringement.  In those circumstances damages will not run on sales lost by the copyright owner until proof of the copyright works is actually supplied to the infringer.  The defence of innocence is difficult to establish in cases of ‘primary infringement’.

Secondary infringement is where the infringing company has not made the infringing product itself but typically has imported it from overseas, often not knowing that it is an infringing product.  If the importation was innocent (the importer did not know or did not have reason to believe that the product was infringing) then the copyright owner will only be entitled damages from the time the importer is made aware of the copyright works. A plaintiff may still obtain an account of net profits from an innocent infringer and is still entitled to an injunction to restrain further sales of infringing product.

WHAT DO I DO IF I RECEIVE A CEASE-AND-DESIST LETTER CLAIMING COPYRIGHT INFRINGEMENT?

Businesses often come to me after they have received a cease-and-desist letter claiming that a product that they are selling infringes copyright.

My job is then to find out whether the allegations made against my client have a proper foundation to them or not and whether any defences are available. Typically I would ask the other side to properly establish its case. This might include proving the existence of the original copyright works. This is because generally the original copyright works need to be produced to prove the case. It is also important to prove ownership of the works including any chain of title to the works.  Where the works were commissioned from a subcontractor or purchased as part of the purchase of a business written assignments are generally required.

Like many commercial disputes, most cases involving copyright infringement settle on agreed terms without the need for Court proceedings. My job when acting for a client against whom allegations of copyright infringement have been made is to make sure that my client receives the best possible advice; understands the options and the pros and cons of each including the risks, costs, and benefits.