By Rohan Vasudevan, Solicitor 

It is a common refrain in the creative industry – “We should copyright that idea!”.  The inference being that if someone “steals” your idea you should sue them for copyright infringement.  In reality, the legal position is very different. The recent Chou v Metstech Pty Limited case (the “Chou Case”) serves as a valuable reminder for artists, creators and businesses alike regarding the complexities of copyright law, and illustrates the distinction between ideas and copyrightable subject matters, and provides a strong reminder that copyright only protects the expression of ideas. The case also highlighted the importance of copyright in relation to creativity, measured by the contribution of an author to a particular work, and the default position of employers owning copyright material produced by employees in the course of their employment.

In this article, we explore the key details of the Chou Case including critical takeaways and broader implications for copyright protection in Australia.

What happened?

Metstech Pty Limited (“Metstech”) is an Australian-based company which designs and sells specific equipment that is used in the mining sector (such as low latency communication equipment). Mr Chou was an employee of Metstech and part of his job was to design and place orders for specific products to be manufactured externally. Following Mr Chou’s departure from Metstech, amongst other things, a dispute arose regarding the intellectual property ownership in specific work that Mr Chou had apparently designed during his employment. A central issue for the court to decide was if Mr Chou had in fact designed specific products or if the design had been done by an external manufacturing company.

While the case was complex and had many elements, a critical element hinged on the identification of the precise copyrighted work, as discussed below. In the original proceedings, the primary judge held that Mr Chou had in fact designed the relevant products and, since he was an employee of Metstech, Metstech were the ultimate owners of the relevant copyright.

An appeal was brought before the Full Court of the Federal Court of Australia on the basis that the primary judge made an error when deciding that the copyright was owned by Metstech.

In making its decision, the Full Federal Court emphasised that copyright protection extends not to the underlying ideas themselves, but rather to the original expression of those ideas. This distinction is crucial, and reaffirms that ideas are not protected under copyright law in Australia.

Back up… what exactly is copyright and what does it protect?

The Copyright Act 1968 (Cth) (“Copyright Act”) outlines the specific manner in which an original work can be copyrighted (for example, through literary works, dramatic works, musical works, artistic works, subject-matter other than works, etc). In short, once copyright is deemed created and thus subsists in a work, it grants the owner specific protections and prevents those without authority from using, publishing or exploiting copyrighted material, or making derivative works, etc. Only humans are capable of being authors under our copyright legislation. In most instances, the author of the work will be the owner of the copyright. However, this is not always the case. For example, as mentioned above, if the author of copyrighted work is an employee of a business, the business can be the owner of the copyright. Similarly, if the author has assigned ownership to a third party, that third party will be the owner of the copyright.

There is a common misconception amongst many industries (including the creative industry) that copyright must be formally registered. In Australia, there is no need to register copyright, as copyright protection vests automatically upon creation.

However, when multiple entities are involved, many businesses do have their own internal copyright registries and documentation to confirm specific ownership of copyright and other related intellectual property. This is of particular importance when ascertaining each party’s specific rights and/or when a business needs to licence or sell intellectual property.

What was the outcome of the Chou Case?

At trial, the primary judge did outline that Mr Chou designed the relevant products and, being an employee of Metstech, Metstech were the owners of the copyright. The Full Federal Court were critical of the primary judge’s assessment and worked through the primary questions of a) if copyright did, in fact, subsist and, if so, b) who the copyright owner was.

The Full Federal Court eventually dismissed the appeal and ultimately ruled in favour of Metstech, holding that copyright subsisted in the relevant products and that Metstech held such copyright. This decision was based on the original determination that Metstech had successfully demonstrated the original expression of the underlying ideas in the products, thereby satisfying the essential requirements for copyright protection. Further, that the material was created by the employee in the course of his employment and thus belonged to Metstech.

That said, the case does demonstrate the complexity of copyright protection and there are some key crucial takeaways for understanding and navigating copyright law, as discussed below:

• Firstly, copyright law does not protect ideas themselves. Only the expression of ideas. That is, simply having an idea for a song or painting does not give rise to copyright protection and does not allow one to sue in copyright for an unauthorised “copy”. One may have rights to sue under other legal principles, but not copyright. It naturally follows that a claim in copyright will require an individual to demonstrate the original and creative way in which that idea was expressed (such as literary or artist work) in order for copyright to exist, and then show that the copyright was infringed.

• Furthermore, it is important to clearly identify the specific work that is protected by copyright. A work cannot be described in an abstract or generic way. Also, identifying the specific work will allow a court to assess whether that work indeed possesses the necessary originality and creativity required for copyright protection. In the Chou Case, Chou’s inability to pinpoint the precise copyrighted work was viewed dimly by the Court and hindered his claim.

• Copyright protection only extends to works that exhibit the requisite originality and creativity. Originality refers to the work being the independent creation of a human author, not a mere copy of something else. Creativity signifies that the work shows a sufficient degree of skill and labour. The Court considered that specific electrical design and prototype manufacturing processes undertaken by Mr Chou were typically undertaken as part of an engineer’s role (and brought into question the originality and creativity aspect required for copyright protection). Ultimately the works were deemed copyright works.

• While registration is not required to obtain copyright protection, the case did highlight the importance of documenting the creative process. This documentation can be crucial in establishing copyright ownership in the event of future disputes. Furthermore, businesses involved in development and innovation should ensure that they have clear ownership agreements in place regarding any intellectual property created by employees, contractors or sub-contractors. This helps to minimise the risk of future disputes and protects the company’s valuable intellectual assets, including if the business is sold.

What does it all mean?

The Chou Case serves as a valuable learning experience for parties involved in the creation and ownership of intellectual property and the complexities involved with copyright protection. Too often we are asked to advise clients who have made false assumptions as to their intellectual property rights, and as a result, their exposure.  By understanding the distinction between ideas and their expression, individuals and businesses can better protect their rights and interests under copyright law in Australia.

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If you would like further information on copyright, including ownership and licensing agreements, please contact one of our experts.