THE CONTRACTOR’S COPYRIGHT IN DESIGN AND BUILD

In the construction industry during the past 20 years, we have seen a strong shift towards ‘Design and Build’. On completion of such a contract the owner/employer will operate the works as designed and constructed by the Contractor. Does it however follow that the Employer owns the design of those works? At our seminars when we pose this question to delegates the majority usually believe that, having paid for the design, ownership of the design resides with the Employer. This is incorrect. Ownership of copyright, both in South Africa and in most foreign countries, is covered by copyright legislation. Unless the copyright owner agrees in writing, signed by him or on his behalf, to transfer his copyright in the design to the Employer, the Employer effectively receives only a limited licence to use the design. Clause 1.10 of the FIDIC Silver Book, 1999 describes the usual international position on ownership of copyright as follows:

“As between the Parties, the Contractor shall retain the copyright and other intellectual property rights in the Contractor’s documents and other design documents made by (or on behalf of) the Contractor”.

Hugh Lane, Legal Consultant at Binnington Copeland and Associates, explains this in greater detail in the following article.

Technical drawings, diagrams, plans, computer programmes and similar items enjoy copyright protection.

Copyright protects creativity in the choice and arrangements of words, musical notes, shapes (including technical drawings and diagrams) etc., i.e. only the form in which ideas, concepts and information are expressed, but not the ideas, concepts and information themselves. It primarily protects against those who copy original works of authorship, i.e. who take and use the form in which the original work was expressed by the author.

Generally copyright is the right which vests in the author of an original ‘work’ (or a person having acquired rights from or through him) the exclusive right to do or to authorise the doing of certain acts set out in the Copyright Act, 1978. This enables him to prevent unauthorised copying or reproduction of that work. By definition an ‘artistic work’ includes a drawing of a technical nature or any diagram, map, chart or plan and ‘works of architecture’ in the form of buildings or models of buildings. In relation to an artistic work ‘reproduction’ includes a version produced by converting it into a three dimensional form, or, if it is in three dimensions, by converting it into a two-dimensional form, and includes a reproduction made from a reproduction of that work. Thus copyright in a drawing can be infringed by copying an article made from that drawing (i.e. ‘reverse engineering’), subject to the exemption in terms of section 15(3A) in respect of reverse engineered reproductions of articles having a utilitarian purpose and made by an industrial process (e.g. spare parts).

The ‘author’ is the person who creates the work in its material form rather than the originator of the ideas which the work contains. The work must be the product of the author’s own independent mental effort, skill and labour and must not be copied from other sources.

The author of a drawing is the maker or creator thereof, but in the case of a computer-generated drawing it is the person by whom the arrangements necessary for the creation of that drawing are undertaken. Unlike patents, designs and trademarks, registration of copyright is not required. In the case of a drawing copyright lasts for 50 years from the end of the year in which the author dies, or if the state owns the copyright, 50 years from when it is first published.

Contrary to widespread belief, it usually does not follow that because the Employer pays for the creation of a drawing the Employer will own the copyright in that drawing (i.e. the right to prevent others from copying or reproducing it). Usually the Employer would obtain only a licence to use that drawing, leaving its author free to licence its use to others (including the Employer’s competitors). For this reason, if the Employer wishes to own the copyright it should expect to pay for it as the previous owner would no longer be entitled to exploit it. Whether taking ‘assignment’ (i.e. becoming the owner) of the copyright or only licensing it, the Employer should ensure that it contracts with the copyright owner – usually the author of the work or, in terms of section 21(1)(d), the employer of the author of the work if the work was made within the course and scope of a contract of service (i.e. employment in the sense of an employer-employee relationship) or apprenticeship with such employer. Where a work is made by or under the direction or control of the State, the State (represented by the Government Printer for administrative purposes) is the copyright owner. Be vigilant in this regard. If a sub-contractor or independent professional creates a drawing or diagram, he must be a contracting party so as to transfer to, or confer on, the Employer the right which the Employer requires. An assignment of copyright must be in writing signed by or on behalf of the assignor.

If no such agreement is expressly entered into, and an architect is engaged to draw plans only, the client would probably have an implied licence to erect a building from those plans on the intended site.

Although the purchaser of a drawing may become the owner of the (physical) drawing upon its delivery to him, without a formal assignment of copyright he would not become the owner of the (intangible) copyright therein as ownership and copyright are separate and distinct rights.

The copyright owner’s remedies for infringement are an award of damages (which at his option may amount to a reasonable royalty payable by a licensee in respect of the work concerned), an interdict, and delivery up of infringing copies plus such additional damages as the court deems fit in the circumstances.

In terms of section 24(2) of the Copyright Act no damages may be awarded if at the time of infringement the infringer was not aware, and had no reasonable grounds for suspecting, that copyright subsisted in the work concerned, but the copyright owner’s other remedies remain available.

In terms of section 24(4) it is not possible to obtain an interdict or other order restraining the completion of a building after construction has begun, or requiring its demolition, where that building constitutes an infringement of the copyright in a work of architecture or the architectural plans on which it is based.

Usually the Contractor owns the copyright in respect of drawings and other materials created by him unless this has been transferred (‘assigned’) to the Employer. This is reflected in many contracts which include a clause to the effect that the Employer and any other person in proper possession of the works is granted a non-terminable, transferable, non-exclusive, royalty-free licence to use, copy and communicate the Contractor’s drawings and other materials to complete, maintain, rectify, repair, modify, extend, operate and demolish the Works, and to make and use modifications thereof for these purposes.

Hugh Lane
Binnington Copeland and Associates (Pty) Ltd

REFERENCES:

‘The Law of South Africa’ (‘LAWSA’): Title on Copyright (Volume 5, Part 2): LexisNexis Butterworths

Loots ‘Construction Law and Related Issues’ (Chapter 18 written by Owen Dean, Keith Brown, Charles Webster and Gavin Morley): Juta & Co: 1995