17 May 2017

Development Q&A

Q: I am buying a development site with the benefit of planning permission. Am I right in thinking there is no issue with me using the design drawings which formed part of the planning application?

A: Reproducing a substantial part of any work in which copyright exists or issuing copies of a copyright work without consent can be an infringement of copyright. It is important to establish up front whether or not you have the right to use any drawings approved as part of a planning permission. Don't just assume that you can! The judgment handed down by the High Court in the recent case of Signature Reality Limited v Fortis Developments [2016] EWHC 3583 (Ch) is a reminder of how the worlds of intellectual property rights and planning can collide with unhappy consequences.

Signature, a property development company, entered into a joint venture with Wordsworth with the aim of re-developing two office buildings in Sheffield as student housing.  The site was owned by a third party and Wordsworth exchanged contracts in May 2013 to acquire the site.  In August 2013, Signature instructed a firm of architects to prepare drawings for the purposes of obtaining planning permission.  In the terms of engagement, the architect retained copyright in the drawings and granted Signature a non-exclusive licence to use them in connection with the project. Two planning permissions were granted in late 2013/early 2014, which specified by way of condition that the development was to be built in accordance with the approved plans that had been prepared by the architect. 

Wordsworth failed to complete the purchase and despite three extensions to the original completion date, by April 2014 Wordsworth had still not provided the completion monies.  The seller's agent therefore set about finding another purchaser and in May 2014, a second property development company, Fortis, became aware of the development opportunity.  Contracts were exchanged with Fortis in August 2014 without Signature's knowledge.  The seller's agent provided Fortis with a link to the approved planning documents on the Council's website.  Fortis downloaded the drawings prepared by the architects engaged by Signature and began to use them for estimation and marketing purposes although it had also instructed an architect to produce drawings.  Signature became aware that Fortis were using the drawings prepared by the architect they had engaged and negotiated an assignment of the copyright to Signature for the purposes of instituting proceedings for infringement of copyright. 

The main issues before the court were whether the drawings were sufficiently original, given the nature of the buildings in terms of form and proposed use, to attract copyright; and, if so, whether Fortis infringed that copyright and was liable to pay damages.  The court held that the drawings were original works and did attract copyright and that the copyright in some, but not all, of the documents had been infringed.  The court made an order for damages to be assessed and indicated that it thought a figure of £20,000 - £40,000 was more appropriate than the figure of £360,000 proposed by Signature.

How can you avoid falling into the same trap?

To avoid infringing copyright, consider the following:

  • If you engage an architect to produce drawings, establish in the contract for services whether you will own the copyright or be granted an express licence to use them.  An implied licence, which exists when an architect is engaged to prepare drawings for the purposes of obtaining planning permission can be transferred to a purchaser of the site.  However, the grant of an express licence allows you to negotiate the terms to suit your circumstances and is preferable.
  • If you are considering buying a site that either has the benefit of planning permission or where the planning application has not yet been determined, as part of any due diligence ensure that the seller procures a copyright licence or an assignment of the copyright from the party who holds the copyright in any drawings, diagrams, plans, photographs or other graphic works you intend to use or adapt for your own purposes.
  • Ensure you establish that any fees due to the owner of the copyright work are paid, particularly if you are being assigned a licence to use the copyright works.  RIBA standard forms and many contracts allow an architect to revoke a licence if fees are not paid so you need to ensure the licence is capable of being assigned to you.
  • Consider inserting warranties as to ownership of copyright into any sale and purchase agreement to give greater certainty over any entitlement to grant licences.  If the warranty is breached, you will have a direct contractual claim for losses arising from a breach of that warranty.
  • Do not assume that because drawings have been approved as part of a planning permission that you have the right to use them, even if they do not bear a copyright notice warning against reproduction without consent.  Whilst the benefit of a planning permission runs with the land, rights over copyright works produced in support of that planning permission do not automatically transfer in the same way.

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