When a design consultant (such as an architect or engineer) brings their plans or designs into material form, copyright will usually subsist in those documents as an artistic work. The designer owns that copyright unless otherwise agreed with their client.
There is a principle of law that a person who prepares designs for a fee, gives an implied permission or licence to their client to use the designs for the purpose originally contemplated. For example, if Council pays a designer to prepare designs for a new child care centre, in the absence of a written contract that says otherwise, there will be an implied licence in Council’s favour to go on and use those plans for the construction of the building.
This makes sense. It provides some protection to the client where there are no express provisions (such as in a written contract) about ownership of copyright, and the use to which the designs can be put. The protection can be important where the designer and the client fall into dispute after the designs have been prepared.
However, the recent Western Australian case of Milankov Designs & Project Management Pty Ltd v Di Latte provides an important reminder that the implied licence may not apply where it would be inconsistent with the express terms of a written contract.
Milankov Designs & Project Management Pty Ltd v Di Latte
A building designer (Milankov) was engaged by Mr and Mrs Di Latte (the Owners) to prepare plans, drawings and specification documentation for the construction of a house. Payment for the architectural services was to be made at the following stages:
- Stage 1 – prepare design and sketch plans ready for submission to the local Council for the purpose of seeking development application approval.
- Stage 2 – prepare working drawings and specifications.
The contract between Milankov and the Owners consisted of a letter from Milankov to the Owners setting out the scope of services. It did not deal with the ownership of the ‘intellectual property’ rights (copyright) in the designs produced by Milankov, or set out the circumstances in which the Owners were permitted to use the plans.
After Stage 1 of the services had been completed, there was a falling out between the parties. The Owners obtained a copy of the approved plans from the Council (because Milankov refused to hand them over), and then engaged a new firm of architects, Lawrence J Scanlan & Associates Pty Ltd (Scanlan), to prepare the working drawings, structural drawings and the specifications necessary for the construction of the house. Ultimately, Scanlan issued over 60 construction drawings and revisions which were used to construct the house.
Milankov later sued the Owners and Scanlan claiming they had infringed Milankov’s copyright in its Stage 1 designs.
The Supreme Court of Western Australia had to determine, among other things, whether Milankov had given an implied licence to the Owners to use the plans prepared by Milankov in the way that they had.
The Court acknowledged that a licence to use the designs may be implied in some circumstances, but also that terms will not be implied where they would be inconsistent with, or excluded by, an express provision of a contract.
Milankov argued that the express terms of the contract required the Owners to retain Milankov to prepare the plans for the purpose of obtaining a building licence. Milankov argued that it would be inconsistent with the express terms of the contract for there to be any implied term allowing the Owners to give the Stage 1 designs to Scanlan, and then use them to prepare working drawings.
The Court agreed with Milankov. It found that on a proper interpretation of the contract, the Stage 1 designs to be prepared by Milankov were for the sole purpose of seeking development approval from the Council, and nothing more. The implied licence in favour of the Owners was limited to using the Stage 1 designs to get development approval. The Owners did not have an implied licence to use the Stage 1 designs for the purpose of engaging another designer to prepare to carry out Stage 2. So, the Owner’s conduct in giving the Stage 1 designs to Mr Scanlan, without Milankov’s consent, infringed Milankov’s copyright in the Stage 1 designs.
Relevance of the Milankov case to local government projects
Councils sometimes engage architects and engineers to prepare designs but later, for whatever reason, decide not to proceed with that consultant. This may occur where the consultant is performing poorly and Council wants to appoint a new consultant.
If the consultant agreement does not deal appropriately with the ownership of intellectual property rights in the design documentation, Council may encounter difficulty if it wants to use the designs later on. The Milankov case shows us that the ‘implied licence’ may not provide a solution for Council, if the terms of the written contract are inconsistent with it.
When negotiating contracts for the preparation of designs (including specifications), Council should ensure that its written agreements deal appropriately and fully with intellectual property rights, including:
- Who will own the copyright in the completed work? It is not unusual for the parties to agree that copyright will belong to the client, because the client paid for the work.
- If the designer is to retain ownership of copyright, what rights will Council have to use it? Council should, at the very least, seek an irrevocable licence from the designer to use the designs for the purpose of carrying out the project in question, regardless of whether the designer actually completes their services.
- Can Council use the designs for future projects? For example, if Council is obtaining a design for a new child care centre, does it want the freedom to use that design as a template for future child care centres elsewhere in the municipality? It may want the freedom to give the designs to different architects, and even to adapt or modify them to suit different sites or circumstances.
For complex projects, it is also appropriate to consider the issue of ‘moral rights’.
Under the Copyright Act 1968 (Cth), rights are given to individuals who create works, such as dramatic, literary and artistic works. In the case of artistic works, these rights extend beyond painters, sculptors and songwriters – they include architects and engineers and the plans and drawings they create. ‘Moral rights’ are rights of attribution (i.e. the right to have the artistic work credited to an individual as its creator) and also the right ‘integrity of authorship’ – to prevent the derogatory treatment of an artistic work.
Where Council seeks the freedom not just to use a design to construct a building, but also to determine how the completed building will be attributed to the designer (if at all) or to modify the design in some way in future, consent from the author may be needed.
Seeking a ‘moral rights’ consent from a designer after they have completed their work can be very difficult. The best time to seek consent is up front – at the time of negotiating the consultant agreement. It is possible for consent to be given in the consultant agreement. For large design companies, this may involve the company undertaking to obtain consent from each individual designer who works on the project.
Maddocks Construction and Projects team
Maddocks advises on all legal aspects of construction projects from their inception to completion.
Maddocks has acted for contractors, subcontractors and government on a number of design projects, including project procurement and tendering, project documentation, contract administration, and has dealt with the management of ownership of intellectual property in design documentation, including the permitted use of project design plans, drawings and specifications and resolution of disputes in relation use of design documentation.
|Harrison Wall | Lawyer
T +61 3 9258 3601
 See Beck v Montana Constructions Pty Ltd (1964) NSWR 229 (confirmed by the High Court in Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd  HCA 55).
 Milankov Designs & Project Management Pty Ltd v Di Latte  WASC 14.