Do I have to pay compensation for copyright infringement if I was an innocent infringer?
There are two forms of compensation that a court can award: (1) the infringer's net profits (known as "an account of profits") and (2) remuneration for financial damage (known as "damages").
Section 115(3) of the Copyright Act 1968, innocent infringers of copyright are liable to pay the copyright owner an account of profits, but not damages.
Damages compensates the copyright owner for lost profits, lost licence fees and/or loss of reputation.
An account of profits takes the profits which the infringer has wrongfully gained.
An innocent infringer must show an active subjective lack of awareness that the act constituting the infringement was an infringement of copyright; and the infringer had no reasonable grounds for suspecting that the act constituted an infringement.
An innocent infringer must have made reasonable enquiries as to the source of the material being copied.
The innocent infringer defence is not available to someone who is simply ignorant of copyright ownership rights, i.e. to an infringer who can show no more than a lack of awareness that copyright was owned by the plaintiff.
In the case of The Dempsey Group Pty Ltd v Spotlight Pty Ltd  FCA 2016, Dempsey sued Spotlight for copyright infringement in relation to quilt and pillow cover designs.
Dempsey sold bed linen through its Bed Bath N' Table stores.
Both Dempsey and Spotlight used a company called Yantai Pacific Home Fashions to make their products.
During a meeting between Spotlight and Yantai, Spotlight saw the designs displayed under a "Bed Bath N' Table sign and ordered the products to be manufactured by Yantai.
Spotlight's evidence was that its buyers had no knowledge or reason to suspect that the selected design samples were based on artistic works in which Dempsey owned.
The infringing products were displayed and sold by Spotlight.
On 29 November 2016, Dempsey contacted Spotlight in relation to its conduct and on 2 December 2016 emailed documents proving its ownership of the relevant artistic works.
Spotlight recalled the infringing products on 29 December 2016.
Spotlight was found to have infringed copyright in Dempsey's works.
However, in respect of its conduct prior to 2 December 2016, it successfully established that it was an innocent infringer.
The Court held that it was reasonable for Spotlight to rely on advice from Yantai.
Until 2 December 2016 Spotlight had no reasonable grounds for suspecting that designs were owned by Dempsey copyright.