Council advised Ministry of Works has copyright of its intellectual property
Charging—Commercial fee for use of designs/drawings
In 1988 a Council engaged the complainant to prepare a design for a bridge. The complainant’s plans called for the use of certain drawings/designs which had first been designed and issued by the former Ministry of Works and Development.
In early 1988 the Ministry of Works and Development ceased to exist and the Works and Development Services Corporation (NZ) Ltd (‘Works’) came into existence. Works later entered into agreement with the Crown to purchase the former Ministry’s assets including all intellectual property rights and copyright. In mid-1989, Works’ solicitors wrote to the complainant advising that Works required them to pay a fee for use of the drawings us in their bridge design. The letter also stated that the complainant had infringed Works’ copyright by using the drawings without previously obtaining Works’ authorisation to do so.
It was not clear from the information whether Works actually had copyright in the drawings at the time of the alleged infringement or whether it was only managing the Crown assets at that time. In terms of the complaint, the copyright question was not relevant because, even if Works had only been managing the Crown’s assets at that time, it appeared that Works was within its rights to charge a commercial fee for use of the drawings. The licence agreement which Works had entered into gave Works the right to manage the assets as it saw fit. The definition of assets in the agreement included drawings such as the ones in question this case. The licence agreement also gave Works the power to exercise all rights in respect of the assets in the same manner as it would do if it actually owned the assets. Also, section 4(1)(a) of the State Owned Enterprise Act 1986 provided that one of the principal objectives of every State Owned Enterprise was to operate as a successful business and to this end to be as profitable and efficient as comparable businesses that are not owned by the Crown. For these reasons, it seemed that whether Works had copyright in the drawings at the time of the alleged infringement or not, Works was legally entitled to charge a commercial fee for use of the drawings.
However, the actual complaint which the Ombudsman had to consider was whether in all of the circumstances of the case, Works had acted reasonably or unreasonably by charging a commercial fee. It was clear that before the demise of the Ministry of Works and Development the drawings in question had been freely available at no charge. According to the complainant the drawings became something in the nature of industry standards which were regularly used by engineers, surveyors and planners. At the time the complainant prepared the bridge plans, he had no reason to believe that the situation concerning the use of the drawings had changed. Works had not advised the complainant that any commercial fee would be payable. It was not until approximately six months after the bridge plans had been completed that Works’ solicitors first approached the complainant to advise that a commercial fee would be required. It also appeared that Works had not even formulated its charging policy until at least four months after the complainant’s bridge plans had been completed.
The Ombudsman’s conclusion at the end of the investigation was that while Works was entitled to charge a commercial fee, in the circumstances of this particular case, it would be unreasonable for Works to do so. The main reason for reaching this conclusion was that the complainant had received no notice from Works of any change to the previous status quo of such information being available at no cost.
Works had initiated breach of copyright proceedings against the complainant, however after the Ombudsman’s final view became known, the parties met and reached a mutually acceptable out of court settlement. This type of complaint was unlikely to arise in the future because Works made it clear to the general public (through advertisements in the New Zealand Gazette) that a fee would be charged for use of its intellectual property.
This case note is published under the authority of the Ombudsmen Rules 1989. It sets out an Ombudsman’s view on the facts of a particular case. It should not be taken as establishing any legal precedent that would bind an Ombudsman in future.