Purchasing a site with planning permission? Buyer Beware! Dangers of copyright infringement for property developers
If you are purchasing a site with planning permission, don’t forget to consider the copyright implications, otherwise you could face a costly damages bill and even have your development stopped in its tracks. This was highlighted by the recent High Court decision in Signature Realty Limited v Fortis Developments Limited.
Copyright and Planning Permission – What do I need to know?
- The existence of planning permission does not necessarily mean that the drawings attached to it can be used to carry out the approved development.
- The copyright in the drawings used in any planning application usually remains the property of the designers that prepared them.
- The copyright can be assigned to another party, or permission to use the drawings may be granted by way of a licence.
What does this mean?
- If you are purchasing a site subject to planning permission, it is likely that you will wish to use the drawings which were prepared as part of the planning application.
- Although the drawings may be publicly available, if you wish to use them, you will need to obtain the consent of each designer either through an express licence, or an assignment of the copyright.
- If the seller engaged the designer(s) to prepare the drawings, an implied licence may be transferred to you, but it is best practice to obtain an express licence, particularly if you wish to make changes to the drawings.
- If the seller did not engage the designers (as in the case of Signature), you will have no licence to use the drawings and any use of them is likely to amount to copyright infringement.
What are the risks?
- A court can award compensation on the basis of general damages or an account of profits (which could be very high) plus legal costs.
- A court can also grant an injunction to stop the development from proceeding.
- Where the court considers that the infringement has been carried out "flagrantly" it has the power to award additional damages.
What if I only copy a small part of the drawings?
- Copyright infringement can take place even where you are only copying a minor part of a design drawing. The test is whether what has been copied is "substantial" and this is measured with reference to quality rather than quantity.
Recent case law
In the case of Signature, the claimant, Signature Realty Limited ("Signature"), a property development company, was interested in purchasing a site in Sheffield and applied for planning permission. As part of the application, Signature engaged an architect ("C & W") to prepare the design drawings. Signature's application for planning permission was approved, but instead the site was purchased by the defendant, Fortis Developments ("Fortis").
The planning permission was granted on the basis that the development should be carried out in complete accordance with the C & W drawings. The local authority uploaded the drawings onto the Sheffield Planning Portal.
Fortis downloaded the drawings from the Portal and used them in the design, marketing and construction of property on the site.
Signature purchased the copyright in the drawings from C & W and issued legal proceedings against Fortis for copyright infringement.
The Court held that Fortis had committed copyright infringement of the design drawings. Compensation will be determined at a further hearing if the parties are unable to agree a figure themselves.
What should you do?
When purchasing a site subject to planning permission, you should:
- investigate who obtained the planning permission and who owns the copyright to the drawings; and
- obtain the express consent of the owner of the copyright to use the drawings by way of either a licence or assignment of the copyright.