Stone the crows: Australia’s iconic Ettamogah Pub found to be in breach of IP licence
The owners of one of Australia’s most iconic and “most photographed pub in the world” (self-professed), the “Ettamogah Pub”, have been embroiled in a dispute in the New South Wales Supreme Court with claims, among others, that it is has not paid royalties owed under its exclusive license to use intellectual property from the cartoon series “The Ettamogah Pub Mob”.
The cartoon series was originally created by the late Kenneth Charles Maynard in 1959 and was widely published through his cartoons in The Australasian Post. Mr Maynard and his company Ken Maynard Studios Pty Ltd (“the Maynards”) owned all of the intellectual property in the cartoons and characters depicted in them until 1994 when the intellectual property was assigned to Southern Equity Pty Ltd (“Southern”).
On 18 November 1993 the Maynards granted Timevale Pty Ltd an exclusive licence to use, in any facility developed and managed by Timevale, the business name “Ettamogah Pub”, registered trade marks and any copyright and design rights in respect of cartoon depictions of the Ettamogah Pub, including those depicted in The Australasian Post and other publications. In return for paying royalties, Timevale turned fiction into reality by building a number of Ettamogah Pub’s across Australia, the most iconic of which (and the subject matter of this dispute), is the original Ettamogah Pub built in 1989 at Aussie World on Queensland’s Sunshine Coast.
The origin of the particular dispute adjudicated by Brereton J was the substantial renovations undertaken by Timevale in 1997, which attached an “Entertainment and Food Barn” at the back of the premises to the Pub by an adjoining roof. Under the licence agreement, Southern was entitled to be paid royalties at a higher rate for items sold in a retail outlet at the Pub, such as souvenirs and similar take away articles including food and drink, giftware and clothing. Southern claimed that Timevale had underpaid royalties from that point onwards, because Timevale did not pay royalties at the higher rate on sales and other income generated in the Barn.
Brereton J rejected Southern’s claim, and held that the renovations did not constitute an extension of the hotel premises and did not “deprive the Barn of its character as a separate occupational space”. Also relevant was the fact that the Barn did not operate under the “Ettamogah Pub” business name. Accordingly, sales and other income generated in the Barn did not attract the higher rate of royalties.
It is interesting to contemplate that if Southern’s licence agreement had been negotiated with slightly broader terms, then Southern might have been entitled to materially higher royalties. This demonstrates that, when it comes to IP licences, quite often the royalty base is more important than the royalty percentage. For those negotiating IP licence agreements, it is therefore a good idea to think about the current and future sources of revenue, and ensure that they are in-scope, rather than continuing the negotiations over a one or two percentage point difference in the royalty rate.
Justice Brereton’s decision is available online here.