Beware the pitfalls of informal licensing agreements

The Federal Court of Australia recently handed down its decision in the copyright case of Hardingham v RP Data. This decision serves as a warning about the risks of informal licensing arrangements. The case centres around copyright infringement regarding the use of photographs and floorplans without authority.

The applicants in the case were Real Estate Marketing (REMA) and its sole director, Mr Hardingham. REMA had been operating its business since 2009 and entered into informal agreements with real estate agencies to create and provide photos and floorplans of properties for marketing campaigns. It was understood by REMA that, as part of marketing campaigns, the agents would upload the commissioned photos to platforms such as realestate.com.au. However, the scope of the permitted uses by the agents was not clearly agreed or recorded in writing.

In the course of the agents uploading property listings to realestate.com.au, the website required that the agents agree to be bound by the terms and conditions of realestate.com.au Pty Ltd (REA), the operator of the platform. The terms provided, amongst other things, that the agents granted REA the right to licence third parties to use the materials contained in the agents’ listings. REA granted such a licence to RP Data, who operates a real estate commercial information database that includes sales and rental information. RP Data reproduced some of REMA’s photographs and floorplans for its database.

The applicants sued RP Data for copyright infringement on the basis that it had reproduced REMA’s photographs and floorplans without authority. In turn, RP Data joined REA to the proceeding as a respondent, as RP Data alleged it had obtained a licence from REA to reproduce the materials.

The key issue in dispute was whether REMA’s informal agreements with the agents were broad enough to authorise the use of the photos and floorplans by RP Data.

The applicants submitted that while REMA had granted the agents a licence to use the copyright materials, this licence was limited to use for the purpose of marketing the relevant property for sale or lease. As the licence did not extend to use after the marketing campaign had ended, they argued, the agents could not have granted RP Data a licence to use the materials after that point. The respondents asserted that the scope of the licence REMA granted to the agents was broad and allowed the agents to, in turn, grant to REA the kind of licence contemplated in its terms and conditions. The respondents also ran an alternative case that the applicants had equitably assigned copyright in the materials to the agencies at the time they were engaged to prepare the materials.

As realestate.com.au was the most popular real estate marketing platform in Australia, Justice Thawley considered that the applicants must have known that the agents would use the materials on that platform. Further, as the applicants had experience in the real estate industry, they would have known that realestate.com.au was in the business of maintaining historical listings. REA’s terms and conditions were also freely available on its website and the applicants should have known their materials were being used subject to such terms.

Justice Thawley also found that even after sending the initial letter of demand to RP Data, the applicants did not take steps to prevent agents from using the copyright materials on realestate.com.au. Rather, the applicants continued to deal with the agents without taking steps to prevent RP Data from using their materials.

In the context of these actions, his Honour found that the applicants had effectively authorised the use of the copyright materials by RP Data.

The respondents’ alternative defence – that the applicants had equitably assigned the copyright in the materials to the agents – failed. Justice Thawley found that there was no evidence that the agents were granted exclusive rights to the copyright that prevented the applicants from also using the copyright works, which was not consistent with an assignment.

This case serves as a warning to both creators and commissioners of copyright materials (including photos, drawings, graphic designs and recordings). The decision is a reminder of the risks involved in relying on informal licensing arrangements instead of written agreements that clearly set out intellectual property ownership and the scope of any licences.

By Savannah Hardingham (not related) and Karen Liu