In cases involving copyright, trade mark, patent or design infringement, the Court has a discretion to award what are known as "additional damages". This is on top of any damages awarded to compensate the rights holder for loss, or awards of restitutionary damages to reverse a transfer of value. While the award of any additional damages will be assessed based on the facts of each case, the Federal Court's recent judgment in Universal Music Publishing Pty Ltd v Palmer (No 2) [2021] FCA 434 sets an almost unprecedented benchmark[1] for the award of additional damages for intellectual property infringement where the infringer's conduct is considered to be particularly egregious.
Palmer cops it for copyright infringement
The copyright in both the music and the lyrics of Twisted Sister's 1985 heavy metal song "We're Not Gonna Take It" is owned by Songs of Universal, Inc., with an exclusive licence in Australia to Universal Music Publishing Pty Ltd.
As part of its election campaign for the 2019 Australian federal elections, the United Australia Party (UAP) published a series of video and audio advertisements featuring the song "Aussies Not Gonna Cop It". The creation of the recording of the "Aussies Not Gonna Cop It" song and its synchronisation with video content were authorised by Mr Clive Palmer, the founder and leader of the UAP. The ads which included the song were transmitted on television, radio and online streaming over a six month period.
Having become aware of the UAP advertisements, Universal decided it would not cop them; it commenced copyright infringement proceedings in the Federal Court of Australia alleging that Mr Palmer had infringed its copyright in "We're Not Gonna Take It" by authorising the creation of the "Aussies Not Gonna Cop It" recording and its synchronisation with the video advertisements. Mr Palmer denied that he had done so, including because he asserted the melody of the song lacked originality as it was based on the Christmas carol "O Come All Ye Faithful". Mr Palmer also claimed that his use fell within the defence of fair dealing for the purpose of parody or satire.
Relying on evidence from an expert musicologist, the Court found that "We're Not Gonna Take It" was not devoid of originality and that there were important musical and lyrical differences between it and the religious song "O Come All Ye Faithful". Justice Katzmann also held that the UAP video advertisements infringed Universal's copyright in "We're Not Gonna Take It" because they contained a reproduction of a substantial part of each of the music and the lyrics comprised in the original work. The Court also found that Mr Palmer failed to make out his fair dealing defence given that his use was neither fair nor for the purpose of parody or satire.
The Court's calculation of additional damages: Mr Palmer is gonna take it
On that basis, the Court held that the UAP advertisements infringed Universal's copyright and ordered that Mr Palmer pay Universal $1.5 million in damages. This total amount was comprised of:
- compensatory damages of $500,000, calculated by reference to the Court's assessment of a hypothetical licence fee for the use of the copyright works during the period the UAP advertisements were published. The Court relied on this approach notwithstanding that it was highly unlikely that the parties would have in fact reached an agreement to licence the work; and
- additional damages of $1 million.
Justice Katzmann was highly critical of Mr Palmer's conduct, stating that it was "high-handed", "contemptuous" and "contumelious", and considered that this was a case in which a substantial award of additional damages was warranted. Specifically, in arriving at the $1 million figure, the Court took into account the following factors:
- Mr Palmer's flagrant disregard for Universal's rights in circumstances where Mr Palmer knew Universal owned the copyright in the musical work and that he needed a licence to use the work, but decided to go ahead without a licence because he was not prepared to agree to licence terms offered by Universal;
- Mr Palmer's behaviour after being informed of the alleged infringement which included public and private attacks on Universal to deter it from enforcing its rights, as well as empty threats to sue the composer and songwriter for defamation;
- Mr Palmer giving false evidence at trial, which included concocting a story to exculpate himself from liability;
- the fact that Mr Palmer intended to, and did, derive political benefit from the unauthorised use of the copyright works without payment of any licence fee;
- that the infringing use of "We're Not Gonna Take It" was deeply upsetting to the original composer and songwriter;
- that Mr Palmer, both before and during the proceeding, publicly taunted, mocked and derided the original composer and songwriter which the Court considered was used to attract publicity to himself and/or the UAP;
- Mr Palmer's failure to comply with his discovery obligations prior to the final hearing from which the Court inferred was a deliberate attempt to frustrate Universal's efforts to understand the full extent of his infringing conduct; and
- the need for any award of additional damages to be sufficiently high to operate as a deterrent for future infringers.
Don't discount the possibility of additional damages
The case demonstrates that a court will not shy away from awarding intellectual property owners a substantial amount of additional damages where the infringement is flagrant, contemptuous and in blatant disregard of the IP owner's rights.
Given that the amount of additional damages can significantly increase the total liability of an infringer, and in some cases dwarf any damage suffered from the infringement itself, the availability of additional damages can be a strong incentive for a rights holder to bring legal action that might otherwise not be commercially worthwhile.
Also, this case serves as a reminder that a broad range of conduct (including conduct after the acts of infringement, such as public statements) will be taken into account when assessing whether additional damages should be awarded, and if so the amount of that award.
[1] In Deckers Outdoor Corp Inc v Farley (No 5) (2009) 83 IPR 245, the Court ordered that the infringers pay additional damages totalling $3,550,000 in light of the particularly flagrant and repeated instances of copyright infringement which covered a period of over four years and was in disregard of court orders and undertakings provided to the Court. At the time of publishing, there does not appear to be any precedent for an award of additional damages at this level in cases involving trade mark, patent or design infringement. Back to article