The Dangers of Informal Licensing Agreements - An Update on the Hardingham v. RP Data Case
In February 2020, we wrote about the Federal Court’s decision in Hardingham v RP Data Pty Ltd, in which Justice Thawley held that RP Data (the operator of a real estate commercial information database) did not infringe copyright owned by Real Estate Marketing (REMA) and its sole director, Mr Hardingham, in images and floorplans created for real estate listings. Justice Thawley found that REMA/Mr Hardingham had effectively authorised the use of their copyright materials by RP Data, via a chain of implied licences and sub-licences from REMA/Mr Hardingham to real estate agencies, to the operator of realestate.com.au and ultimately to RP Data. This was despite the fact that there was no clear or written agreement between REMA/Mr Hardingham and the real estate agencies to whom the copyright images and floorplans were supplied.
Now, in the recent appeal judgement, the Full Federal Court (by a 2:1 majority) upheld REMA/Mr Hardingham’s appeal of Justice Thawley’s decision. The majority of the Full Federal Court bench in the appeal (being Justice Greenwood and Justice Rares) held that Realeaste.com.au (REA) and RP Data did infringe the copyright in REMA/Mr Hardingham’s photographs and floorplans, as the implied term contended by REA/RP Data (and found by the primary judge) could not be made out in the circumstances.
Key issue in dispute
The key issue in the appeal was whether the primary judge, Justice Thawley, was mistaken when he concluded that the oral agreements between REMA/Mr Hardingham and the real estate agents included a licence authorising the use of the photos and floorplans by third parties.
Justice Greenwood stated the main question at issue was not whether a licence was a term of the oral agreement, as “use [of] the works for the purpose of a marketing campaign” was clearly intended. Rather, the question was whether the scope of the authority granted to the agencies was limited in the way contended by REMA/Mr Hardingham or extended in the way contended for by REA/RP Data.
The majority judges were not satisfied that, in the circumstances of the case, the principles on adopting inferred or implied terms supported the primary judge’s conclusion. Accordingly, it was held that the primary judge fell into error in adopting, as a term of the oral agreement, a licence authorising the use of the photos and floorplans by third parties.
The majority judges found that:
There was not a sufficient basis to infer a term that REMA/Mr Hardingham and the agencies agreed that the agencies could grant a licence to REA on any terms of any kind whatsoever as might usually be published and amended by REA at any time. It was not enough that REMA/Mr Hardingham knew the oral agreement allowed agencies to engage with REA and upload works to its platform where both the parties understood objective terms and conditions would likely need to be accepted.
It would be too severe to infer a perpetual, irrevocable, world wide, royalty free and assignable licence was actually intended by the parties on the basis of the oral terms. This type of term would only be inferred if the evidence of all the surrounding circumstances demonstrated REMA/Mr Hardingham and the agencies were actively aware of, and held common knowledge of, the precise scope of the inferred term.
It was not clear that the oral agreement included an inferred term which largely reflected the REA Terms and Conditions, and granted a licence to RP Data to exercise any and all of the rights REA purported to have acquired from the agencies. REMA/Mr Hardingham had no direct dealings with and received no compensation from RP Data, who earned subscription revenue from use of REMA/Mr Hardingham’s photographs and floorplans. It was difficult to conclude that REMA/Mr Hardingham and the agencies would have agreed upon a licence of this scope had they turned their minds to the question of whether this should be conferred upon the agencies.
As the scope of the authority to use the copyright works in the alleged implied term was significantly against the interests of REMA/Mr Hardingham, it could not be concluded that such a term was so obvious that it would go without saying, or that it was required to give business efficacy to the oral contract. Therefore, the established principles governing the adoption of inferred or implied terms, as applied to the circumstances of the case, did not support the primary judge’s conclusion that a licence could be implied to authorize REA and RP Data’s use of the copyright works.
As an aside, Justice Greenwood noted that REA and, in particular, RP Data were put on notice of REMA/Mr Hardingham’s claims and position, and yet continued to act in reliance on their own conflicting view as to the scope of the licence.
Accordingly, the appeal was upheld and both REA and RP Data were found to have infringed the copyright in REMA/Mr Hardingham’s photographs and floorplans.
This decision serves as a warning to commissioners of copyright materials (including photos, drawings, graphic designs and recordings), and highlights the risks involved in relying on informal licensing arrangements. Businesses who use a third party’s intellectual property should take care to ensure there is a paper trail showing that the intellectual property owner consents to any use of their materials. This includes website operators who use third party imagery, as in this case.