Wilson v. Weiss Art Pty Ltd

(1995) AIPC 91-139

(Judgment by: Hill J)

Between: Faye Ann Wilson
And: Weiss Art Pty Ltd

Federal Court of Australia

Hill J

Subject References:
Intellectual Property

Hearing date: 13, 14 and 30 March 1995
Judgment date: 23 May 1995


Judgment by:
Hill J

Faye Ann Wilson, the applicant, is an artist and an illustrator. Between 1982 and 1987, at the request of McSpedden Carey, an advertising agency, she executed various drawings. At least at the outset, the Agency was the advertising agent for Peter Weiss Pty Limited ("PWPL"), a clothing manufacturer and vendor. She claims in these proceedings that the respondent, Weiss Art Pty Limited, without her licence, reproduced or procured the reproduction of some or all of these drawings, published them or sold articles which constituted an infringement of her copyright in the drawings. In consequence she claims, inter alia, a declaration that the respondent has infringed her copyright, injunctive relief and damages or an accounting of profits.

2. By order of Burchett J the issue of liability for breach of copyright was heard and determined separately from, and prior to, any issue of damages or an account of profits.

3. Although there is some divergence of evidence, the basic facts are not really in dispute and may shortly be stated.

4. McSpedden Carey ("the Agency") was, at relevant times, a rather small advertising agency. It was established in 1980 and its principals were Mr Bani McSpedden and Mr Peter Carey. Shortly after the Agency was established, PWPL became a client of it. One of the principals of PWPL, at that time, was Mr Peter Weiss who early approached the Agency for advice on establishing a recognisable image for clothing marketed under the Weiss brand.

5. The Art Director of the Agency, Mr Pavlovitch, and his then assistant, a Ms Uttinger, prepared some simple brush drawings using Indian ink on a white background and thereby created what may be called a recognisable style which was used to promote Weiss garments in a newspaper advertising campaign from 1980 onwards.

6. Ms Uttinger died suddenly in 1982 and Mr Pavlovitch had the task of locating alternative illustrators to prepare further "Weiss" illustrations for the Agency. It was in this context that he came to interview Ms Wilson. Mr Pavlovitch gave Ms Wilson a layout and asked her to prepare a drawing in the same style as that which Mr Pavlovitch and Ms Uttinger had devised using broad brush strokes of black ink on white paper.

7. There is little evidence of the initial commercial arrangement between Ms Wilson and the Agency. Mr Pavlovitch did not suggest in his evidence that he had any commercial discussions with Ms Wilson. He led her to believe that the Agency wished to have the right to cut up and change the illustrations if they were to be used. Most of the discussion probably centred upon the requirement that the drawings be in "the Weiss style". There was no discussion about copyright. Mr Pavlovitch made it clear to Ms Wilson that the drawings were for use in advertising products of Weiss and there was no discussion concerning the use of the drawings for merchandising purposes.

8. From 1982 Ms Wilson supplied drawings upon request. The initial procedure adopted where drawings were required was that the Agency would issue a work order indicating the subject or concept to be adopted. Ms Wilson would prepare a number of drawings and present them. It was clearly understood by the parties that not all of the drawings would be used and payment would be made only in respect of drawings which the Agency wished to use. Having made that decision, the Agency issued a purchase order to Ms Wilson in respect of the drawing to be used. She, in turn, then invoiced the Agency by reference to that purchase order.

9. Initial drawings were for use in advertisements to be placed in the media. According to Ms Wilson's evidence Mr Pavlovitch said to her, words to the effect, "these are for newspaper advertisements and when you invoice me make a note to that effect". Mr Pavlovitch could not recall that conversation and pointed out that at least some of the drawings were for use in Vogue magazine or in media other than print media. It is unnecessary to choose between the two versions of the conversation. I would find, however, that Mr Pavlovitch made it clear that the drawings were for use in media advertising, whether or not he in fact limited his comments to newspaper advertising.

10. Towards the end of 1985, the system for requesting drawings and ordering them changed slightly. Ms Wilson was asked to prepare some illustrations as "roughs". For this she was to be paid a set amount. If the Agency decided to use any of the illustrations among the roughs then they would send her a purchase order for the illustration and upon receipt of an invoice from her they would pay an additional $500 per illustration. Under this arrangements Ms Wilson was paid a total of $1250 for 10 drawings prepared as roughs. Seven of these drawings were subsequently ordered by the Agency and invoiced.

11. In January 1986 Ms Wilson attended a meeting at the Agency's office. Up to that point in time Ms Wilson had understood that her drawings were to be used only for newspaper or print advertising (including magazines). Ms Wilson, in her evidence, initially deposed that Mr McSpedden was at the meeting. In oral evidence she said she thought that both Mr McSpedden and Mr Carey were present, although she was not certain. Mr McSpedden, on the other hand, denied that he had ever spoken to Ms Wilson, other than casually, until June 1986.

12. Nothing really turns upon whether Mr McSpedden was or was not present at the January meeting. Whoever was present made it clear that the illustrations, which Ms Wilson was to prepare, were for use for a promotional booklet which was being put together to be taken to Japan to promote the products of PWPL. An arrangement was made that Ms Wilson would be paid a fee of $350 for each drawing. This figure was negotiated as being less than the normal advertising rate as the drawings were to be used only for the specific purpose of illustrations for the booklet to be taken to Japan.

13. Ms Wilson was approached again in May 1986 for more drawings. According to her evidence, both Mr McSpedden and Mr Carey were present at the time. Again, Mr McSpedden denied his involvement in the meeting. One of them, according to Ms Wilson, said "we would like some more in the series of Australiana for the promotional book for Japan". On this occasion an agreement was reached that she was to be paid $1500 for "roughs" of the illustrations on the understanding that if then ordered she would be entitled to invoice for a further amount. Ten drawings were supplied by her as roughs in about June 1986.

14. To this time there was no hint that the drawings were to be used for any purpose other than advertising the goods of PWPL in media advertisements, other than in respect of those drawings specifically commissioned for involvement in the promotional booklet for use in Japan.

15. On or about 11 June 1986 a conversation took place between Ms Wilson and Mr McSpedden. The versions of that conversation given by the two protagonists widely differ.

16. According to Ms Wilson's affidavit evidence, Mr McSpedden said words to the following effect:

"I have noticed that Weiss have been using your illustrations on shopping bags and I have drawn it to their attention that technically they are breaching your copyright. I told them that they really need to pay you an additional fee for this. I propose that we have a new system of payment from now on. If we decide to use one of your illustrations we will pay you a fee of $500 for advertising and an additional $500 for other uses. We will notify you that we wish to use an illustration by sending a purchase order followed by payment once we receive your invoice. This would be for any of the new work you have done for us and submitted as roughs. As for all the old illustrations up to that set including the Tennis Racquet and Beach Flag, I don't think they would pay you more than say $1000 for other uses as they have already paid advertising rights for these. I'll see what they say."

17. Mr McSpedden, on the other hand, deposed in his affidavit that the conversation was somewhat shorter. According to his evidence he said:

"We are looking at a merchandising programme which could involve some or all of your drawings. We don't know how many things they may go on or how many drawings will be used. We will be keeping you advised and you will entitled to an additional fee for everything that we use."

18. I should say at this point that Ms Wilson presented as a truthful witness and I am satisfied that she gave her evidence, both on affidavit and in the witness box, honestly and as best she could, having regard to the lapse of time that has occurred since the events in question. Mr McSpedden did not make such a good impression. His affidavit evidence had been prepared, he said, from a statement he had made a year or so after the events in question when litigation between the parties was first threatened. Although this might suggest that his recollection stemmed from a time closer to the events in question, he appeared to me to go out of his way to press favourable versions of events into evidence when the matters in question were not called for by the questions asked. I would prefer, in the event of inconsistency, the evidence of Ms Wilson over that of Mr McSpedden. Particularly I think it is most likely that Mr McSpedden did participate in the meetings with Ms Wilson prior to June 1986. No-one else called in evidence for the respondent appeared to have been present. The only other person who could have attended the conversation was Mr Carey, who was not called.

19. The major dispute between the parties in this conversation is whether the words "merchandising programme" were used. I have no doubt that Mr McSpedden has no recollection of whether those precise words were used or not. He said orally that they would have been, but was clearly reconstructing. Mr McSpedden denied making any reference to the use of Ms Wilson's drawings on Weiss shopping bags.

20. It seems clear enough that Ms Wilson was told nothing about the plans which Mr McSpedden had for a joint venture between the Agency and PWPL. The proposal for that joint venture appears to have been under way by about May 1986 when a shelf company was acquired, the shares in which were held as to one share by Mr McSpedden, one share by Mr Carey and two shares by Talbridge Pty Limited, a company associated with Mr Peter Weiss. That company changed its name to Weiss Art Pty Limited, the respondent, on 8 October 1986. Although little is known of the circumstances surrounding the acquisition by Mr McSpedden and others of the respondent company, it is clear that its purpose was to engage in a merchandising activity, manufacturing or procuring the manufacture at a profit of various items on which appeared drawings in the Weiss style, including those of Ms Wilson. The venture was ultimately profitable.

21. Mr McSpedden had a further conversation with Ms Wilson on or about 25 August 1986. According to Ms Wilson, this was a shorter conversation in which Mr McSpedden said words to the following effect:

"Look, I've spoken to Weiss and they've agreed to the proposal we discussed when I last spoke to you. I'll send you out a cheque for $1000 for the `other uses' rights for the old illustrations and a letter outlining the new terms of payment as discussed."

22. Mr McSpedden's version of the conversation was as follows:

Mr McSpedden:

"Faye, I'm just following up our last conversation when I mentioned we would be using some of your drawings on various items."

Ms Wilson:

"What are they being used for?"

Mr McSpedden:

"We are trying to put them on everything from towels to T shirts. What we're thinking is that we will pay you $1000 for merchandising rights for everything you have done to date. But we will also need additional drawings and for those we will pay you $500 for the drawing for advertising plus an additional $500 if we use it for merchandising."

Ms Wilson:

"That sounds fine. Do you want me to invoice you for that or how will it happen?"

Mr McSpedden:

"Well, we'll send a cheque to you for the $1000, and you'll invoice us as usual for new drawings after we've advised you they're being used."

23. I think it is more probable than not that Mr McSpedden was not as open as he says he was in his conversation with Ms Wilson. In particular, I would not find that he made it clear that the drawings could be used for merchandising on anything from towels to T shirts. It is clear, however, that Ms Wilson was aware that the additional payment she was to get was to permit her drawings to be used on shopping bags, caps and T shirts which were promotional adjuncts to the clothes sold by Weiss. I do not think that the conversation went beyond this. I find that no reference was made to the proposal that the respondent would merchandise for a profit a large range of items incorporating Ms Wilson's drawings.

24. Shortly after that telephone discussion, Mr McSpedden wrote a letter, on the Agency's letterhead, to Ms Wilson. In that letter Mr McSpedden purported to confirm the two conversations of 11 June and 25 August "regarding costs". The letter said, relevantly:

We will pay you $1000 for all rights to all material to June 1986.
We will pay $500 for each future illustration used for advertising.
We will pay an additional $500 for all rights for these illustrations."

25. The letter enclosed a cheque for $1000 "for the rights to work up to June 1986".

26. The February 1987 issue of Vogue Australia contained an article entitled "Weiss Goes International", showing a new range of what were said to be Weiss designs. The article contained photographs of models wearing clothing bearing illustrations drawn by Ms Wilson. It referred to parades held in London, New York and Tokyo. According to Ms Wilson, some of the illustrations featured in the article were illustrations for which she had received payment only as roughs. No other payment had been made for them. She says that after seeing the Vogue article she telephoned Mr McSpedden advising him she had seen the article and that she wanted to know what was going on. According to her evidence he suggested a meeting.

27. Both Ms Wilson and Mr McSpedden are at least in agreement that Ms Wilson was angry after reading the Vogue magazine, particularly in that one of the drawings shown in it was one that for which she had received no payment at all, namely, that of a kangaroo. According to Mr McSpedden he said he would look into the matter and subsequently arranged for a meeting with Ms Wilson at which other persons from the Agency were also present. According to Ms Wilson's evidence the meeting was in two parts and at only one of them were persons other than Mr McSpedden present. According to Mr McSpedden he mentioned that there was a hope that something would be done with David Jones and that Ms Wilson had then said:

"That sounds pretty big. People have told me that I should ask for a percentage or a royalty."

According to Mr McSpedden he had then said:

"I can't see that that is possible as the concept is ours and if we have to pay a royalty we will be forced to do the work in house. I have had discussions with people such as the Ink Group and have been told that the most we can expect in total is 7% royalty on profit for Weiss Art and it would be simply economically not viable to divide that up any further. If you feel that you wan't (sic) to do something in your own right and name, I'll introduce you to the Ink Group. We're happy to pay you an above market price for everything we can use. In any case, there's no point having a percentage of nothing. You can't get a percentage unless you are going to contribute to the costs which look like being huge. It's up to you, we want to use some of your drawings, we've got an agreement, what do you want to do?"

28. According to Mr McSpedden, Ms Wilson then said: "Okay, we'll proceed as is."

29. According to Mr McSpedden he then asked Ms Wilson to draw up a list of all illustrations she had drawn so that a check could be made of which drawings had been used and for which drawings payment had been made.

30. Ms Wilson's recollection of the conversation is somewhat different, however, both seem in agreement that Ms Wilson raised the question of her being paid a royalty and Mr McSpedden advising that "they", implying thereby Weiss, would not pay royalties. According to Ms Wilson, Mr McSpedden said:

"They won't pay you any more than $500 for advertising and $500 for other uses as we have already discussed."

31. She says that he apologised for the fact that she had not been notified how the drawings were to be used and that he promised that she would be in the future.

32. The subsequent part of the meeting at which others were present concerned methods of payment, as well as an invitation made to Ms Wilson to attend a launch of the products on which her drawings appeared at the David Jones department store in Sydney.

33. On 13 March 1987 Mr McSpedden wrote to Ms Wilson on the Agency, letterhead a letter in the following terms (so far as is relevant):

"This letter reconfirms our agreement to pay you $500 per illustration used in advertising for Weiss, and $500 per illustration used in any other applications.

This is in addition to any charges for roughs done at our request.

Further, I confirm that we will advise you when payments are due, based on the information in our job bags which tells us how and when illustrations are being used."

34. Mr McSpedden attached a list of illustrations from the Agency's records.

35. Ms Wilson says, and I accept her evidence, that at no time prior to May 1987 had there been any reference in any conversation of a separate company Weiss Art Pty Limited. She says, and I accept her evidence, that she was, at least until that date, unaware that her art was to be used on a large range of articles from greeting cards to golf balls and deckchairs, having nothing to do with the direct promotion of the fashion goods of Weiss. There was no discussion to this effect. Mr McSpedden did not deny that he may have made no reference to Weiss Art Pty Limited as a separate company and, to the extent that he used the expression "Weiss Art" at all, accepted that he was referring to the concept rather than the respondent.

36. The respondent launched a large range of products at David Jones in May 1987. All the windows of the store displayed products bearing Ms Wilson, drawings and the fifth and sixth floors were taken up with all manner of merchandise bearing them. The merchandise included towels, sheets, pillowcases, beach towelling robes, large framed prints, deckchairs, greeting cards and paper, yo-yos, underwear, tissue holders, make-up purses and T-shirts. Drawings depicted on these products included drawings of a cello, musical notes, flowers, an emu, a cockatoo, a koala, a kangaroo, a kookaburra, a lyre bird, the Harbour Bridge and the Opera House. At the time no order had been placed for four of these illustrations, nor had any payments been made for rights other than advertising with respect to them.

37. Ms Wilson was away at the time of this launch but saw the display upon her return. Ms Wilson's recollection of the next conversation with Mr McSpedden is "very vague". It seems that Mr McSpedden rang Ms Wilson after the David Jones launch to gauge her reaction to the display at that store. There was some discussion of an article in The Bulletin written about the Weiss Art concept, in which no credit was given to Ms Wilson. That was the last time that Mr McSpedden and Ms Wilson spoke to each other.

38. There was, at the outset of the case, some dispute between the parties as to the usage of Ms Wilson's drawings on merchandise sold by the respondent. There was also dispute as to the occasions upon which payments had been made to her. That dispute was largely resolved during the course of the hearing as a result of evidence given. The situation can thus shortly be summarised as follows.

39. Ms Wilson submitted to the Agency a total of forty seven drawings. Of these, thirty five were submitted prior to June 1986 and twelve were submitted in June 1986 and March 1987.

40. It seems that nine of the illustrations submitted by Ms Wilson were not used at all, whether for advertising or merchandising. Seven illustrations were used by the respondent, being illustrations for which no advertising fee was paid but for which a fee for merchandising was alleged to have been paid. In two cases an advertising fee was paid but the design was not used for merchandising. In a number of cases a drawing was used for merchandising well before any payment was ever made to Ms Wilson in respect of the drawing. In respect of at least two of the drawings, payment was tendered to Ms Wilson but the cheques were not banked by her. This was after the dispute between the parties arose.

41. On 1 July 1987 solicitors instructed by Ms Wilson wrote to the Agency alleging copyright infringement and demanding undertakings, inter alia, to deliver up offending works. For its part, the Agency claimed that copyright in all relevant drawings vested in their client, by implication, the respondent. The correspondence led to the present proceedings.

42. The issue between the parties is of relatively narrow compass. The respondent claims that the applicant has assigned or agreed to assign the copyright in the drawings, so far as that copyright extends to the right to reproduce the drawings on merchandise directly or indirectly, to it. Alternatively, the respondent says that the agreements arranged by Mr McSpedden with Ms Wilson should be construed as a licence from her to use the drawings in the manner in which they have been used by the respondent. The applicant, on the other hand, denies that there has been an assignment or agreement to assign, and claims that the agreement entered into with the Agency should be construed as a personal licence operating in favour of PWPL, not the respondent.

43. Alternatively, the respondent submits that if otherwise there was no assignment but a licence which was personal to PWPL, that the applicant is estopped from asserting that she did not irrevocably give the rights identified to the respondent. Reliance is placed also on what is said to be misleading and deceptive conduct by the applicant in breach of s42 of the Fair Trading Act (NSW) 1987, constituted, it is said, by silence on the part of the applicant which entitles the respondent to damages equivalent in amount to any damages that would be recoverable by the applicant.

44. There are two minor issues which arise only if the applicant is entitled to succeed in these proceedings. The first concerns the ownership of the copyright in a drawing of a platypus, of which the applicant asserts she was the author, and the respondent asserts that it purchased from another illustrator. The second concerns whether photos of items upon which the applicant's drawings appear entitle the applicant to payment of a fee for advertising, (the advertising fee remaining unpaid) in addition to the "other rights" fee which had been paid.

45. Certain general propositions of copyright law may be shortly stated. They are not seriously in dispute.

46. It is clear that under the Copyright Act 1968, the author of an artistic work will be the first owner of the copyright in it: s35(2). That ownership carries with it the exclusive right, inter alia, to reproduce the work. Copyright may be assigned: s196(1), and that assignment may be of the whole of the author's rights, or there may be a partial assignment: s196(2) and s16. A legal assignment must be in writing under the hand of the copyright owner: s196(3). An agreement to assign for consideration, not being a legal assignment, operates in equity as an equitable assignment.

47. Copyright may also be the subject of a licence given by the owner. Sections 36 and 37 dealing with direct and indirect infringement make it clear that a licence involves permission to do what would otherwise constitute an infringement: British Actors Film Co Ltd v Glover [1918] 1 KB 299 ; Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd (1988) 20 FCR 46 . A licence may be exclusive: s10(1), or non-exclusive: cf s196(4), and may be in respect of particular parts of the overall rights conferred upon the copyright holder. Exclusive licences, like assignments, are required to be in writing. However, an agreement binding upon the copyright owner to license another to do some act which otherwise would constitute an infringement need not be in writing signed by the copyright owner: cf s15.

48. The onus in the present case lies upon the applicant to show that she is the owner of the copyright and that she has not licensed the respondent to use the drawings in the manner described: Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88 .

Was there a partial assignment of Ms Wilson's copyright?

49. It is obvious enough that the questions whether there was an assignment, or equitable assignment, and the extent of the rights assigned, depend upon the construction of the agreement reached between the parties as reflected in the letter of 26 August 1986. That agreement was not wholly in writing, so the terms of the agreement must be found against the background of the two conversations of 11 June and 25 August to which reference has already been made. Nor does the parol evidence rule preclude reference to the way the parties subsequently acted for the purpose of ascertaining what their agreement was: Australian Estates Ltd v Palmer (New South Wales Court of Appeal, 22 December 1989, per Samuels JA, with whose judgment Kirby P and Meagher JA agreed).

50. It is clear that, prior to the letter of August 1986, payment for drawings from time to time related solely to the right to reproduce the drawings for advertising products of PWPL in the print media and perhaps in other media as well. I exclude from this payments made for reproduction of particular drawings in the promotional booklet intended to be taken to Japan, where the rights conferred on PWPL were limited to that purpose.

51. In making this initial arrangement the Agency acted, as the parties both accepted (subject to comments made below), as agent for "Weiss", that is to say, on the evidence, PWPL. Although Ms Wilson had no clear idea about "Weiss" as a company, she knew a company existed through which Mr Peter Weiss and Mrs Adele Weiss operated. Even if the Agency made no specific reference to PWPL, it clearly contracted as agent for that company as undisclosed principal and Mr McSpedden was clear in his affidavit evidence that the client for which advertising services was performed, which paid for those services and which was concerned with advertising fashion goods which it marketed, was PWPL. In this regard I would prefer the considered affidavit evidence which Mr McSpedden gave to his evidence in cross-examination, given on the spur of the moment when he accepted that his client was "Weiss Pty Ltd". The evidence was not in the context that there were different companies, one called Weiss Pty Ltd and the other Peter Weiss Pty Ltd. The case otherwise proceeded on the basis that there was, apart from the present respondent, only one Weiss company, called Peter Weiss Pty Ltd.

52. Clearly Ms Wilson did not intend, when this initial arrangement was entered into, to assign to PWPL absolutely the right to reproduce the drawings in a material form, being one of the rights referred to in s31(1)(b) of the Copyright Act. It is clear, also, that the relations between the Agency and Ms Wilson proceeded with some informality, particularly with reference to copyright, a topic of which it would seem Mr McSpedden had a somewhat inexact knowledge. Surprising as it might seem, the Agency never attempted to obtain formal assignments of copyright in copy or drawings for the benefit of its clients, nor did it seek to document in any formal way the rights which it, on behalf of clients, obtained in works the subject of copyright.

53. It was submitted for the respondent that the cases show that the courts "strive" to find that a particular contract operates as an assignment, rather than as a licence. This is said particularly to be the case where artistic works are concerned. I was referred to a number of cases, among which were London Printing and Publishing Alliance Ltd v Cox (1891) 3 Ch 291; E.W. Savory Ltd v The World of Golf Ltd (1914) 2 Ch 566; Murray v King (1984) 4 FCR 1 ; Chaplin v Leslie Frewin (Publishers) Ltd (1966) Ch 71; Wintergarden Theatre (London)Ltd v Millennium Productions Ltd (1948) AC 173; and Greenfield Products Pty Ltd v Rover-Scott Bonnar Ltd (1990) 17 IPR 417 .

54. What these cases demonstrate, however, is merely that the question whether there has been an assignment is one of construction of the particular instrument in the light of the particular circumstances. It is true, as Lacy v Toole (1867) 15 LT 512, Chaplin and the Rover-Scott Bonnar cases demonstrate, that formal language will not be required to effect an assignment. It will not be necessary that an assignment use the word "assign" (cf Chaplin), nor will it be necessary for there to be specific reference to "copyright": Murray v King (supra), where the sale of "all right, title and interest in" a business was held to effect an assignment pursuant to s196 of copyright owned by the vendors. The writing relied upon, if a legal assignment be asserted, may be in the form of a receipt: (see The world of Golf (supra)) or an invoice (London Printing and Publishing Alliance (supra)).

55. Ultimately, the question whether there has been an assignment, if a legal assignment is relied upon or, if not, whether there has been an equitable assignment will depend upon whether the writing or the terms of the agreement reached reflects or reflect an intention on the part of the assignor to effect an assignment of, or to agree to, assign copyright. In reaching a conclusion upon intention the commercial significance of the transaction to the parties will, no doubt, form part of the surrounding circumstances to be considered: Messager v British Broadcasting Corporation Ltd (1929) AC 151; Loew's Inc v Littler [1958] 2 All ER 200 , both cases on facts wildly different, however, from the present.

56. Although much was made in argument of the distinction between assignment and licence, I am of the view that in the present case nothing really turns upon that distinction. It is difficult to see for present purposes what difference there could be between an equitable assignment of a limited right and the irrevocable grant for consideration of an exclusive licence to use copyright limited in a particular way. The grant of an irrevocable and exclusive licence for consideration must create in equity in favour of the licensee an interest in the copyright, no different from that created in favour of an assignee by an equitable assignment, except for the right, in an appropriate case, to call for a legal assignment. An assignee under an assignment of limited rights has by force of that assignment the exclusive right to use the rights assigned the same way as a licensee has.

57. The important question in the present case is, if the matter is approached as an equitable assignment the extent or definition of the rights assigned or, if the matter is approached as a licence, the terms of that licence. It should be noted that no evidence was led of any assignment of rights from PWPL to the respondent.

58. In the present case it is clear that both parties believed that the effect of the initial transaction was to confer upon PWPL, as the Agency, client, a limited but clearly exclusive and irrevocable right to use the drawings in connection with the Weiss logo for the purposes of advertising Weiss fashion goods in the media.

59. The real dispute between the parties is as to the legal effect of the agreement relating to the "other rights". Although the letter from the Agency referred to "other rights", it is clear from the context of the discussion between Mr McSpedden and Ms Wilson that neither contemplated that Ms Wilson was assigning the residue of her rights in the drawings to the Agency, client. Counsel for the respondent did not submit to the contrary. The context of the discussion was the use of the drawings on goods, such as shopping bags, to be sold separately from the fashion goods, in conjunction with which the drawings had previously been used for advertising purposes. Although Mr McSpedden may have used the word "merchandising", I would not find that he did so in the context of merchandising everything from "towels to T shirts". The conversation was in relation to a more limited right than that. In reaching this conclusion I take into account the reaction of Ms Wilson when the extent of the use of the drawings, and particularly the extent of the classes of goods on which they were used, became known to her.

60. I would find that the agreement between the parties was for the right to reproduce the drawings in conjunction with the Weiss logo on merchandise to be sold by PWPL as promotional adjuncts to the clothes sold by that company. Again the right was an exclusive and irrevocable right and was conferred upon the principal of the Agency.

61. I would find that neither party to the agreement intended that the Agency's principal should have the exclusive right to use the drawings upon any merchandise unconnected with "Weiss" brand fashion goods, or indeed upon any merchandise of any merchandiser. As an example discussed in the evidence illustrated, it could hardly have been contemplated that Ms Wilson was authorising the use of the drawings by some assignee of the right upon products for use in a brothel. She was clearly content, however, to authorise use of her drawings by PWPL upon items to be separately merchandised by that company, in the context that these items could be seen to be related to advertising "Weiss" brand fashion goods. Although Ms Wilson wrote on her copy of an invoice (repeating what had been written upon the purchase order from the Agency delivered to her) the words "for merchandising rights", she did so in the context to which I have referred.

62. Counsel for the respondent submitted that I should imply into the arrangement between the parties a term that the drawings were for use by any company in conjunction with that company's authorised use of the Weiss logo, that authorisation being an authorisation from "Weiss". It is hard to see how this necessarily assisted the respondent since there was no evidence of any authorisation to it to use the Weiss logo. The implied term suggested was not characterised as an inferred term of the kind discussed in the judgment of the Full Court of this Court in Thompson and Morgan (UK) Ltd and Ors v Erica Vale Australia Pty Ltd (unreported, Full Federal Court, 19 April 1995).

63. In my view there are a number of difficulties with the implication of a term in that form. First, it was not necessary to give business efficacy to the agreement that the use be by any company subject to the restriction referred to. At the time there was, so far as the evidence discloses, only one company which both advertised and marketed Weiss goods. No decision had yet been made to merchandise goods through another company, the respondent, although a shelf company had been acquired. Second, the term is not so clear that it is self-evident. While no doubt Ms Wilson was content for the merchandised goods to be marketed by the company which marketed Weiss fashion goods, she may well have had a different view if the goods were to be merchandised by some other company. Third, there is in any event difficulty in expressing the term and the complexity of the way the term is expressed suggests that no such term should be implied.

64. In the above comments, I have taken into account of what was said by Deane J in Hawkins v Clayton (1987-8) 164 CLR 539 at 571-572 that, in a case where the contract is not in writing, but is wholly or partly oral, the cumulative requirements for determining whether a term should be implied in a contract, which are to be found in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 , should not be automatically or rigidly applied. However, I would not find that the express agreement of the parties included such a term, and find no need to impute to the parties an intention to reach an agreement based upon that term.

65. There is another difficulty which stands in the way of the respondent, case. That is the question of the party upon whom the right was conferred by Ms Wilson.

66. The submissions for the respondent proceed upon the assumption that the right or licence was conferred upon "Weiss". However, it is clear from these submissions that the word "Weiss" is intended to include both PWPL and the respondent. To express the matter so contains the seeds of error.

With which company did Ms Wilson contract as principal?

67. Upon the evidence it is clear that the terms of the agreement, as reflected in the conversations between Mr McSpedden and Ms Wilson and as confirmed by Mr McSpedden's letter, show an agreement between Ms Wilson and Weiss as undisclosed principal. Subsequent orders and payments constituted fresh contracts between the same parties, but on the terms and conditions contained in the original agreement. The respondent can hardly have been a party to the original agreement. Mr McSpedden's evidence makes it clear that the standing of the shelf company, which later changed its name to Weiss Art Pty Ltd, was in a state of flux. Its role in events had not yet been determined. At the time its name had not yet become Weiss Art Pty Ltd. For these reasons it is clear that the Agency's principal was PWPL and not the respondent.

68. For the purpose of reaching this conclusion it is not to the point to submit, as the respondent did, that to conclude that there was no agreement between the applicant and the respondent on the ground that Ms Wilson did not know of the existence of the respondent, was "commercial nonsense". On the facts of the present case Ms Wilson's contract was simply not with the respondent, even if in other cases it is true that businesses "routinely and for many legitimate reasons are arranged in groups". There is no evidence to support the proposition that "Weiss" was a "group of entities ... linked by their identifying use of the `Weiss' brand". There is no basis for a finding that the Agency acted for any party other than Weiss and, in consequence, no basis for finding that the contract entered into was a contract with the respondent.

69. Thus, if the arrangement be characterised as an equitable assignment it can be seen that Ms Wilson agreed to assign to PWPL a limited right, namely the right to reproduce the drawings in which copyright subsisted on articles to be merchandised by PWPL in connection with the Weiss logo, and as part of advertising the fashion goods which PWPL merchandised.

70. It might be added that no evidence was adduced of any assignment of relevant copyright from PWPL to the respondent. There was evidence of an agreement between the Agency and the respondent on the Agency ceasing to be a shareholder that the Agency would assign any copyright rights to the respondent, but that would be of no assistance to the respondent's case here.

71. If the arrangement should properly be characterised as an exclusive licence, that licence is limited in the same way, namely, to use of the drawings on articles which would be merchandised by PWPL in connection with the Weiss logo and as part of advertising the fashion goods which PWPL merchandised.

72. The involvement of PWPL had, I would find, significance to Ms Wilson, over and above the association with "Weiss" brand fashion goods. Those goods were positioned, it can be inferred, at the higher end of the market and were clearly tasteful. It would be unlikely that an artist would consent to an arrangement where her designs could be used in conjunction with products which might detract from the artist's own reputation were the artist's involvement to become known.

73. Although, as I have said, I do not think the result in the present case differs depending upon the characterisation of the right conferred as an equitable assignment or irrevocable licence, I am inclined to the view that a licence was intended, particularly having regard to the close connection which the right conferred had to PWPL and the products which that company marketed.

Was the licence, if the right created should be so construed, assignable?

74. Counsel for the respondent submitted that, if the proper construction of the agreement were that it operated as a irrevocable licence, such a licence should be construed as containing an implied term that the licence was assignable from the licensee to any other entity bound within the Weiss group, by their use of the brand name "Weiss". The so-called implied term has again merely to be set out to be rejected as relevant to the present case. Such an implied term creates an initial ambiguity by its use of the words "Weiss group". While that expression would, no doubt, comprehend a wholly owned subsidiary of PWPL, it is not at all clear that it would comprehend a joint venture company where only some of the shares are held by Weiss. Nor are the words "any other entity bound within the Weiss group" intelligible.

75. Additionally, it is submitted that it should be inferred that the parties intended that the rights to use the drawings could be assigned to "anyone lawfully using" the Weiss brand. While it is possible to infer that the respondent, in marketing the goods upon which the drawings appeared, was lawfully using the Weiss logo (curiously no evidence was adduced from Mr Weiss), the context of the original agreement does not lead me, in any event, to the conclusion that the licence was given in conjunction with an unlimited range of goods to be merchandised for their own sake, but that it was given only in conjunction with merchandising of goods as part of a promotion of the "Weiss" brand fashion goods which PWPL merchandised. This context seems to me to contradict the wide term for which the respondent contends.

76. I would thus conclude that the use by the respondent of the drawings, the copyright in which continued in Ms Wilson, involved an infringement of Ms Wilson's copyright without her licence.

Estoppel and the Fair Trading Act

77. The respondent's case based on estoppel or the Fair Trading Act warrants scant attention.

78. It is submitted that an estoppel arose because the respondent assumed that payment by it for particular illustrations would give to it the irrevocable right of reproduction for advertising and merchandising and that this assumption or expectation was induced by Ms Wilson. Particularly it is said:

"that Ms Wilson :

did nothing after receipt of the March 1987 letter to communicate her assertion as to the position between the parties;
acknowledged the right of `Weiss' to use the illustrations paid for advertising and merchandising by the submission of her list after the March meeting.
continued to issue invoices and accept payments for illustrations pursuant to the arrangement up until August 1987; and
continued to acknowledge the rights as they were understood by the respondent until at least November 1990."

79. So it is submitted that the respondent was induced to proceed to exercise the rights it believed it had in the development of its business by the David Jones launch in May 1987.

80. There is no direct evidence of any such belief on the part of the respondent. There is no evidence of any payment having been made by the respondent, rather than by PWPL. Ms Wilson had no knowledge of the existence of the respondent, according to her evidence, which I accept, until May 1987 when the David Jones launch occurred. Accordingly the initial factual matters relied upon to found an estoppel have not been made out.

81. It is submitted that the same analysis would yield the conclusion that, by allowing the respondent to continue with its false assumption or expectation the applicant engaged in conduct which was misleading and deceptive or likely to mislead or deceive the respondent in contravention of s42 of the Fair Trading Act. That was a continuing misrepresentation beyond the end of May 1987 constituted by Ms Wilson's silence and her positive conduct in causing her solicitor to send a letter of demand in November 1990.

The submission is easily answered. First, and so far as it depended upon the factual assumption of payment made by the respondent to Ms Wilson, it can not be supported. Second, if the respondent did have a false assumption, and there is no evidence one way or the other about its state of mind, that assumption was neither induced by nor known to Ms Wilson. It is thus hard to see that any silence on her part could fall within the circumstances whereby silence may constitute misleading and deceptive conduct.

The platypus drawing

82. Of the two matters which remain for consideration the first concerns the platypus drawing. Ms Wilson asserts, and the respondent denies, that Ms Wilson was the author of the drawing of a platypus which was used by the respondent on articles which it sold.

83. Ms Wilson swore that she was the originator of this drawing and I have no reason to doubt that she was truthful when she did so. No payment was made to her for its use. She had not kept a copy, but this was not exceptional. Originals were sent to the Agency and once used were not kept by it either.

84. Evidence was given by Julie Travers and Daniel May that payment had been made to a David Barnes for rights to use the drawing. Ms Travers was the financial controller of PWPL (with access to the records of the respondent, which had no separate employees) and her only knowledge of the transaction was an invoice she had seen. Mr May was executive assistant to Mr Peter Weiss, the Managing Director of both PWPL and the respondent. He too had no personal knowledge of the matter, but had passed on an invoice for payment to Mr Barnes.

85. It may be inferred that Mr Barnes, like Ms Wilson had drawn a platypus. The question is which platypus was used by the respondent. Mr Barnes was not called. There was no attempt to explain his absence and indeed it appeared that he was, to the best of the knowledge of Ms Travers, still in Australia. In accordance with well-established principle, it may be inferred that Mr Barnes' evidence would not have assisted the case for the respondent.

86. There being no direct evidence to the contrary of that given by Ms Wilson, I would accept her evidence that she was the author of the platypus drawing used by the respondent and I so find.

Whether photographs of merchandise require payment of advertising rights?

87. The final matter for decision arises in the following way.

88. The evidence showed that payment had been made for "other rights" in the case of drawings depicting an emu, a cockatoo, a kookaburra, a lyrebird, an echidna, a kangaroo and a koala. However no payment had been made in respect of these drawings for "advertising rights". The drawings in question had been used on goods merchandised by the respondent, which goods had been photographed and published in the media in a way which served to advertise Weiss fashion apparel. The question is, whether Ms Wilson was entitled to be paid the amount agreed for advertising rights, as well as the payments for the "other rights".

89. In my view the question does not really arise. The fact that Ms Wilson was paid the fee for "other rights" did not authorise the respondent to use the drawing. The authorisation was an authorisation of PWPL. To the extent that PWPL used the drawings to advertise its goods without payment of the advertising fee, that is a matter between PWPL and Ms Wilson, but PWPL is not a party to the present proceedings. However, should I be wrong about this I will briefly express my views on the matter.

90. Advertising may take many forms as everyday experience suggests. The use of a logo on the sails of a racing yacht may be a most effective way to advertise the products of a sponsor. The advertising may then be reinforced when the yacht is photographed with the logo prominently displayed. Advertising is placed at sporting functions, not merely because it may be seen by those who attend, but because it may be seen by the much greater numbers who view the event on television in their lounge rooms. The question, however, would not be whether the use of the drawing in association with the logo can be said to be advertising, but whether the use of the photograph of apparel on which the drawing appears falls within the licence for "other rights" arising by virtue of the payment of the fee by PWPL to Ms Wilson.

91. The "other rights" licence authorised the reproduction of the drawings on articles for sale in conjunction with the fashion goods of Weiss. Such licence must, of necessity, carry with it the right to photograph the product. The fact that the photograph may also serve to advertise Weiss fashion apparel is not to the point. Ultimately the whole point of the merchandising program was to advertise the Weiss logo and fashion apparel.

92. In these circumstances I am of the view that Ms Wilson would not have been entitled to receive an additional advertising fee.


93. Accordingly, Ms Weiss has been successful in establishing that the respondent breached her copyright in reproducing the drawings on merchandise. I will hear counsel as to the form of orders to be made and accordingly I would order that the matter be stood over to a date to be fixed with counsel when argument can be heard on the form of orders I should make and directions can be given as to the further conduct of the proceedings.