The universality of the internet and the use of automation to identify potential copyright infringement has increased copyright holders’ ability to identify and enforce their copyright. However, where there is uncertainty around the potential remedies that a court might order in respect of copyright infringement, it can be challenging for parties to come to a commercially sound settlement in relation to copyright infringement.

In this article, we examine the monetary remedies a court can impose in relation to copyright infringement.

Background

In Australia, copyright is governed by the Copyright Act 1968 (Cth) (Copyright Act). The Copyright Act provides that, in the event of copyright infringement, the infringing party can be subject to:

• if the infringement was innocent, an account of profits; or
• if the infringement was not innocent, damages; and
• if the infringement was not innocent and the circumstances warrant a further award of damages (including due to the flagrancy of the infringement), additional damages.

Account of profits

An account of profits is an equitable remedy that is intended to prevent unjust enrichment, not punish the infringer. The distinction between an account of profits and damages is that an account of profits simply requires the infringer to give up their ill-gotten gains, whereas damages are awarded to compensate the copyright owner for the loss actually suffered.¹

Traditionally, at common law, an account of profits only required an infringer to give up profits made unconscionably, i.e. when they were aware of the infringement. However, under the Copyright Act, an account of profits may be awarded even if the infringer was unaware and had no reasonable grounds for suspecting there was an infringement of the copyright.²

In quantifying an account of profits, courts consider:

• the overhead costs incurred by the infringer, as these do not constitute part of the profits; and
• the portion of profits that can be attributed to the infringing use.

Calculating the portion of profits is simple when sales are attributed to the infringement in their entirety. However, when the infringement only forms part of the sales, the copyright owner is required to establish causation, i.e. that the infringement resulted in the infringer making a profit, and how much of those profits were made because of that infringement. This can be done in a number of ways, such as comparing sales figures during the infringement with sales figures without infringement. However, this question undoubtedly becomes more complex in circumstances where a number of steps were taken contemporaneously with the infringement which could arguably be attributable to the profits made, and will require a consideration of the issues on a case by case basis.

Compensatory damages

As discussed above, damages are calculated to compensate the copyright owner for the loss it suffered due to the copyright infringement. This is typically understood as the depreciation in the value of the copyright caused by the infringement.
This depreciation can be calculated in numerous ways, including with reference to:

• the fees the infringer would have had to pay to use the copyright lawfully;
• the profit the copyright owner would have received from any diverted sales; or
• the profit the copyright owner would have received but for the infringer’s actions.

These damages are calculated by the court based on the specific facts of the case.
In Milankov Designs & Project Management v Di Latte³ (Milankov v Di Latte) the Supreme Court of Western Australia considered what damages a plaintiff was entitled to when it claimed damages in relation to lost profits.

In that case, the plaintiff alleged that the defendants had infringed their copyright by using plans developed by the plaintiff as part of a construction process after terminating their contract with the plaintiff. The plans in question had been prepared pursuant to a contract, which terms contemplated further steps being undertaken by the defendant following completion of the plans. The Court held that the plaintiff was entitled to the profits it would have received for being part of the second stage of the project.

In making this decision, the Court highlighted that the opportunity the loss relates to must be substantial, and not merely speculative. In respect of contracts, this requires proving on the balance of probabilities that the infringing party would have entered into or, in the case of Milankov v Di Latte, continued those existing contractual relations, but for the copyright infringement.

Additional damages

The Copyright Act also allows the court to also award additional damages when the court determines that it is proper to award additional damages.
As referred to above, when deciding whether an award of additional damages is appropriate in the circumstances of the case, the court may consider the following factors:

• the flagrancy of the infringement;
• the need to deter similar infringements of copyright;
• the conduct of the defendant after the act constituting the infringement or, if relevant, after the defendant was informed that the defendant had allegedly infringed the plaintiff’s copyright;
• whether the infringement involved the conversion of a work or other subject‑matter from hardcopy or analog form into a digital or other electronic machine‑readable form;
• any benefit shown to have accrued to the defendant by reason of the infringement; and
• all other relevant matters.

The amount of additional damages that can be awarded will depend on the nature of the infringement. This may be, but does not need to be, proportionate to the compensatory damages awarded. This reasoning has been applied by courts to award hundreds of thousands of dollars of additional damages even where compensatory damages have been insubstantial.

In Lift Shop Pty Ltd v Next Level Elevators Pty Ltd (No 4)⁴ the Federal Circuit and Family Court of Australia considered whether it was appropriate to award additional damages in circumstances where the respondent copied the terms and conditions contained in the plaintiff’s quotation documents and for use in the respondents own quotation documentation. The applicant argued that the flagrancy of this infringement was a basis for additional damages to be awarded.

The Court held that this infringement was not sufficient to justify an award of additional damages. The Court provided a reminder that not every infringement that is not innocent will justify additional damages being awarded. In particular, the Court found that whilst it was deliberate, the infringement was not a ‘cynical pursuit of benefit’ or a retaliatory act, and accepted evidence that the respondents had in fact not given much thought to the real consequences of the infringement.

On appeal, the Full Court of the Federal Court of Australia upheld this decision, reiterating the principle that ‘deliberate’ conduct is not necessarily determinative for an award of additional damages.⁵

This decision provides a reminder that the award of additional damages is not a binary process, but is a discretionary exercise which requires the court to weigh the relevant factors in the circumstances of each case.

Next steps

The cost of copyright infringement can be high.

In cases of innocent infringement, these costs are the amount of any ill-gotten gains made by the infringer. However, where the infringer is aware of the copyright, both compensatory and additional damages may be awarded.

HWLE’s IP and IT teams have extensive experience in advising businesses regarding copyright infringement. If you are concerned about your risk exposure for copyright infringement, please contact us for further information on how we can assist you.

This article was written by Luke Dale, Partner, Max Soulsby, Associate and Alexandra Beal, Associate (reviewed by Peter Campbell, Partner).

¹ Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25.
² Faction Ltd v Toast Sales Group Pty Ltd [2012] FCA 612.
³ [2018] WASC 14.
⁴ [2024] FedCFamC2G 554.
⁵ Lift Shop Pty Ltd v Next Level Elevators Pty Ltd [2025] FCAFC 108.