Copyright is personal property. It can be given away, assigned or licensed.
By licensing copyright, you authorise another entity to use that copyright while retaining ownership. Often, disputes arise with respect to the scope of such a licence. This may include scenarios where the licensee attempts to sub-license the copyright to a third party without first obtaining the owner’s permission.
This matter was recently the subject of judicial comment in Hardingham v RP Data Pty Limited [2021] FCAFC 148.
The facts
Mr Hardingham is a photographer by trade. He takes promotional photographs of real estate and licenses them (though his company Real Estate Marketing Australia Pty Ltd (REMA)) to real estate agents.
Usually, Mr Hardingham would receive a telephone call from an agent when his services were required. In that sense, there were never any written contracts. Rather, the arrangements between REMA and the agencies were informal oral agreements (Oral Agreements).
It was uncontentious that REMA provided the agencies with a license to use Mr Hardingham’s photographs for use in the agencies’ marketing campaigns. This extended to allowing the agencies to upload the photographs to Realestate.com.au, being a real estate listings site operated by Realestate.com.au Pty Ltd (REA).
However, by uploading the photographs to realestate.com.au, the agencies were required to agree to REA’s terms and conditions of use (REA T&Cs). The REA T&Cs required the agencies to license to REA use of all photographs uploaded, permitting REA to further sub-license the photographs as it wished. Ultimately, REA did sub-license Mr Hardingham’s photographs to RP Data Pty Limited (RP Data), which operates a real estate marketing service that relies on the input of various information, including photographs.
Mr Hardingham took issue with this sub-license to RP Data. He argued that the terms of the Oral Agreements did not extend to permitting REA to sub-license his photographs to RP Data (both entities not being a party to the Oral Agreements).
The Federal Court of Australia disagreed, finding that in order for the agencies to use the photographs for its marketing campaigns, it was necessary they be permitted to upload those photographs to . To achieve this, the agencies were required to agree to REA’s T&Cs (permitting REA to sub-license to RP Data). Therefore, it was an implied term of the Oral Agreement that the photographs would be uploaded to Realestate.com.au and, therefore, REA would be entitled to sub-license the same.
Mr Hardingham appealed to the Full Court of the Federal Court of Australia.
The appeal
By judgment 2-1 in Mr Hardingham’s favour, the Full Court of the Federal Court of Australia found that the Oral Agreements did not include an implied term acquiescing to the agencies’ compliance with the REA T&Cs, including REA’s right to sub-license the photographs to RP Data.
In his judgment, Justice Greenwood outlined in detail the test for determining whether a term should be implied into an informal agreement. In short, he found that the question will generally consider whether the term to be implied:
Justice Greenwood concluded that there was no sufficient basis for inferring a term permitting REA to sub-license to RP Data (by way of the agencies’ acceptance of the REA T&Cs). Such a term would be “sufficiently expansive” so as to grant REA an almost unfettered right to exploit the photographs. In Justice Rare’s judgment, he found that the implied term was not necessary for the effective operation of the Oral Agreements.
Accordingly, REA’s sub-licence to RP Data (and RP Data’s use of the photographs) was without REMA’s authority and an infringement on its copyright.
Lavan comment
When entering into an agreement to license use of intellectual property, parties are free to negotiate terms of use. Often, parties will carefully consider whether a license should include a right to sub-license. Usually, a licensor will require the licensee to seek written approval prior to entering into any sub-license with a third party.
However, when parties enter into informal agreements, there can be difficulty discerning the limits of any licence given. This can lead to disputes where the licensor sees its intellectual property used in a manner it never expressly authorised.
We recommend obtaining legal advice prior to entering into any licence arrangement with respect to intellectual property. If you require further assistance or advice, contact Iain Freeman or Andrew Sutton.
