Intellectual property assignments and the right to sue

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The process of identifying and protecting intellectual property (IP) rights often involves entering into IP assignment deed to transfer rights to another entity.  There are various reasons why parties will want to do such an assignment including asset protection and for the purposes of commercialisation.  The question that often arises after an assignment has occurred is whether or not the recipient (or assignee) of the IP has a right to sue for past infringement of the rights obtained.

In the case of Re Taypar Pty Ltd v Benko Santic [1989] FCA 543 (Taypar or Applicant) apart from the substantive question of whether the applicants copyright had been infringed by Benko Santic (Benko or Respondent) the secondary question of whether the ‘assignee was entitled to sue for infringements committed prior to the assignment had to be determined.

Taypar was a builder that carried on business as “Jupiter Homes”.  Benko was also a builder.  Taypar claimed to be the owner of the copyright in a plan labelled “Drawing 87.404”, labelled “Reflections” and constructed at Mermaid Waters.  Taypar alleged that Benko had infringed its copyright by:

“reproducing or authorising the reproduction of the said work in a material form in a plan entitled ‘Proposed residence Lot 405 Pebble Beach Drive, Runaway Islands, for Mr. B. Santic.“

Subsistence of copyright

The original author of Drawing 87.404 was a Mr Robin Butt of a firm called Hancox Butt (HB).  HB was engaged by the Applicant to produce the drawings and the house plan and that the copyright subsisting in the drawing and the plan had been acquired by way of assignment that was reduced to writing dated 24 March 1988.^[1]  The assignment documents that were signed by Mr Butt were as follows:

“To Whom it may Concern,
I hereby relinquish copyright of the ‘REFLECTIONS’
design as enclosed and as constructed at Lot 53,
Drayton Terrace, Mermaid Waters to Jupiter Homes
Pty. Ltd.”

Spender J at 20 stated that subsistence of copyright as an artistic work and as a bundle of rights pursuant to section 31 of the Copyright Act 1968(Cth) (Act) “was not really an issue in these proceedings.”^[2]  Spender J then went on to consider the elements of copyright and to conclude that they were all satisfied, however concluded at 33 that “Notwithstanding this finding, in my view the application fails”.

The requirements of section 115(1) of the Act

Section 115(1) of the Act states:

“Subject to this Act, the owner of a copyright may bring an action for infringement of the copyright.”

It was said by Spender J at 34:

“In my view the owner of a copyright or the respective owners of parts of the copyright are the only persons entitled to bring an action for infringement of the copyright or the respective parts of the copyright, and it is not competent for an assignee of a copyright to bring an action in respect of an infringement that occurred prior to his becoming the owner of the copyright, merely by virtue of being the assignee of the copyright.”

Despite their being a valid assignment of copyright, the infringement occurred prior to the date of the assignment.   Because of this Spender J ruled that Taypar was not the owner of the copyright at the time the infringement took place with the result being that it was not competent to sue.

Why didn’t the assignment allow for the assignee to sue?

Spender J at paragraph 37 said:

“In my view there is nothing retrospective in any assignment effected by those documents. In particular there was no assignment or purported assignment of any right to litigate in respect of earlier breaches of the copyright.”

Put another way:

• the assignment of the intellectual property was not retrospective in nature; and
• there had been no assignment of any right to sue for earlier breaches of copyright.

The problem for the Applicant in this case was that a bare right of action is a separate right from an intellectual property right and must be explicitly assigned.^[3]

Spender J quoted Starke in “Assignment of Choses in Action” and classified copyright as a chose in action.  An assignment of a chose in action is a transaction or disposition which has the effect in general of immediately transferring the right in question from the party in whom it is invested to another party.^[4]

For the same reasons, it was said by at Henry J at 58 in Coles v Dormer & Ors [2015] QSC 224 that:

“A mere assignment of copyright does not carry with it a right to enforce any accrued rights of action for infringement prior to the effective point in time of the assignment.”

Therefore the question of what rights are capable of being assigned to give effect to the full benefit of the subject works is not simply answered.

Assignment of incidental rights associated with the works in question

Another decision where the right to sue for infringement of copyright that occurred before the assignment of the subject works was Microsoft Corp v PC Club Australia Pty Ltd [2005] FCA 1522.  Conti J at 118 cited the strike out application in Global Brand Marketing Inc v Cube Footwear Pty Ltd (2005) 65 IPR 44 where Taypar and Dixon Homes were distinguished because despite the assignment of copyright being retrospective in nature the owner of the copyright assigned:

“(a) any and all rights, title and interest it may own, in the copyright and all other intellectual property rights subsisting in the Works; and

(b) all rights and immunities relating to, or arising, or to arise from any of the copyright subsisting in the Works, including all past, present and future rights to sue for infringement of the copyright and all other intellectual property rights in the Works.”

Goldberg J considered it arguable that the assignment was not of a “bare right of action” but “of a right which is incidental to the assignment of intellectual property rights”.  In other words, it is permissible to retrospectively assign rights which are incidental to the assignment of intellectual property rights however it is not permissible to assign a bare right to sue.

Takeaways

Contracts dealing with the assignment of intellectual property right, despite their apparent simplicity need to be carefully drafted.  An IP assignment clause should contain a description of the property being transferred, the time the assignment is effective and the full extent of the rights which are being transferred.

Links and further references

Cases

Coles v Dormer & Ors [2015] QSC 224

Dixon Projects Pty Ltd v Masterton Homes Pty Ltd [1996] AIPC 91-291

Global Brand Marketing Inc v Cube Footwear Pty Ltd (2005) 65 IPR 44

Microsoft Corp v PC Club Australia Pty Ltd [2005] FCA 1522

Re Taypar Pty Ltd v Benko Santic [1989] FCA 543 (21 December 1989)

Legislation

Copyright Act 1968 (Cth)

Further information about IP assignments

If you need assistance with intellectual property assignments, please telephone me for an obligation free and confidential discussion.

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Para 6, Re Taypar Pty Ltd v Benko Santic [1989] FCA 543 (21 December 1989).

[2] Para 20, Re Taypar Pty Ltd v Benko Santic [1989] FCA 543 (21 December 1989).

[3] Para 37 Re Taypar Pty Ltd v Benko Santic [1989] FCA 543 (21 December 1989), quoting Trendtex Trading Corp. v. Credit Suisse (1982) AC 679.

[4] Para 26 Norman v. Federal Commissioner of Taxation [1963] HCA 21; (1962-63) 109 CLR 9.

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