MTECC NEWS 22.08 ||| Don’t assume that a licence to use design plans is always implied
In Building Corporation WA Pty Ltd v Marshall (No 2)  WASC 140, the Court held that clients who had contracted with a luxury home builder to prepare a “Design Concept Plan” did not have an implied licence to use the design prepared.
The clients entered into a “Contour Survey and Conceptual Design Agreement” with the builder (the Agreement) for the purpose of assisting them with the design and construction of a $5 million home in Perth. The Agreement referred to a staged process. First, it contemplated a “Design Agreement” stage by which a Design Concept Plan was to be prepared for a small fee as well as, amongst other things, a specification and a fixed price proposal. Then, it referred to what was called a “Preliminary Agreement” stage and a “Contract Signing” stage.
Over the course of about six months, the builder provided the clients with concept plans, elevations and three‑dimensional images of a house to be constructed on their property, which documents were said to constitute the Design Concept Plan. The parties did not, however, enter into a building contract and the builder brought proceedings claiming that the clients had infringed its copyright in the Design Concept Plan.
The key issue was whether an implied non-exclusive licence arose in favour of the clients to use the Design Concept Plan to construct the house.
The Court held that the Agreement was not within the class of contracts into which a licence is to be implied as a matter of law. Nor did the Court find that a licence should be implied as a matter of fact.
Tottle J observed that a licence to use an artistic work is implied to avoid the aim or purpose of the Agreement between the parties being stultified or undermined thus, in effect, depriving the putative licensee of the benefit of the bargain. His Honour construed the Agreement as governing only the initial stages of a process with the immediate aim or purpose of preparing a full specification and fixed price proposal.
Noting that every such case will turn on its own facts, the Court emphasised that, here, the builder was not in business as an architect or a home designer, stating (at ):
Although there may be some overlap in the required work, the engagement of an architect to prepare plans for the construction of a house and the engagement of a builder to prepare a concept design for the purposes of preparing a specification and pricing proposal, are not sufficiently analogous for the principles that govern the former to be applied to the latter. One can readily appreciate why the implication of a licence is required in the architect’s retainer to avoid the contractual aim being stultified, but the same considerations do not apply to the engagement of a builder for the more limited purpose of preparing a concept design, specification and pricing proposal.
His Honour held that the implication of a licence was also not necessary to lend business efficacy and concluded that the Agreement would be understood by a reasonable person to mean that it did not confer a right to use the Design Concept Plan unless and until the clients executed a building contract.
Liability limited by a scheme approved under professional standards legislation