Case: CIPEC v First Melbourne Securities Pty Ltd [1999] FCA 660
Outcome: cited
First , it denies use of the new Norm 4 in 1 bucket as a source of ideas. Secondly , it contends that the applicant has adopted an unorthodox approach in adducing evidence of its claim of authorship and originality of the works and thus subsistence of copyright in the plans with the result that, at the threshold, the applicant's case necessarily fails for lack of proof. Thirdly , it contends that if the sequence of development of the plans by the applicant involved developing a three-dimensional part and then a two-dimensional drawing simply as a version of the three-dimensional work, copyright can not subsist in the drawing: the drawing must come first. Fourthly , the diversity of buckets available in the market at the dates on which the drawings are said to have been originated for the applicant' s 4 in 1 bucket, is compelling evidence of a lack of originality in the plans. Fifthly , it contends that the applicant did not originate the plans in suit at the date alleged and thus copyright did not subsist in the plans at the moment in time when the respondent is said to have engaged in infringing conduct. Sixthly , it contends that an examination of the plans makes it plain that its drawings do not constitute a reproduction of the applicant's drawings. Seventhly , the diversity of manufactured buckets in the market at the moment in time when the respondent developed its 4 in 1 bucket is compelling evidence that the features reflected in the respondent's plans are consistent with features well known in the market and thus any similarity of features has not derived from copying the applicant's components for its 4 in 1 bucket. Eighthly , the applicant has failed to properly establish a foundation for the calculation of damages. 15 Ninthly , the respondent contends that if copyright subsists in each artistic work, the applicant has nevertheless industrially applied a corresponding design in circumstances where the corresponding design was either not registrable or had not been registered at the material time and thus by reason of Part III , Division 8, ss 74 to 77 of the Copyright Act , it is not, for the period prior to 17 June 2004, an infringement of the copyright in each artistic work to reproduce the works by applying that corresponding design to an article, at any time after articles made to the corresponding design were first sold (or offered for sale). Further, the respondent contends that after 17 June 2004, it is not an infringement of the copyright in each artistic work, by force of s 77(2) of the Copyright Act (introduced into the legislation by the Designs (Consequential Amendments) Act 2003 effective from 17 June 2004) to reproduce each artistic work on or after the day on which products made to the corresponding design were first sold (or offered for sale), by embodying that corresponding design in a product . 16 The applicant joins issue with the respondent on all of those contentions and says firstly that even though the respondent made changes to its drawings for the components in March 2005 and further changes in October 2005, the changes are simply cosmetic changes designed to obfuscate the continuing conscious reproduction of the applicant's works and secondly, the pre-conditions for the operation of s 77 of the Copyright Act whether under the form of the legislation in existence prior to 17 June 2004 or as amended by the Designs (Consequential Amendments) Act 2003 , are not satisfied. 48 First , the moment in time when Mr Pesch made design changes to the 'First Plans' for the bucket is said to be 2001/2002. Secondly , the changes are described as 'design changes'. Thirdly , the changes were made necessary so as to respond to demands from some customers due to the greater horsepower of some machines using the buckets. Fourthly , initial changes occurred by making changes to the bucket itself in the workshop and as a result Mr Pesch says he managed the process to 'improve and make changes to the previous design' . Fifthly , once the changes had been made to the bucket, the plans were changed to 'reflect' the changes. Sixthly , the plans which show the content of the changes emanating from Mr Pesch's improvements to the First Plans comprise 19 new plans called the 'Second Plans'. Those 19 plans are identified by reference to the applicant's List of Documents and all 19 plans are attached to the list verified by Mr Pesch in December 2005. Seventhly , each of the 19 plans relates to component parts of the bucket and Mr Pesch says he drew those plans using Autocad software. Eighthly , Mr Pesch describes two features of the componentry for the bucket and the orientation of those components as an explanation of the changes to the bucket and thus the changes resulting in the second plans. Mr Pesch says that it was necessary to incorporate a stronger and better structure for the buckets because under additional horsepower, the buckets tended to break using the existing design for the pivot system which under hydraulic pressure would cause the bucket to open and close. Mr Pesch says the other major change to the design resulting in changes to the plans concerned the geometry of the bucket which meant that 'two sides of the buckets were altered so that wear was reduced' . 49 Paragraphs 10 and 11 of Mr Pesch's affidavit of 22 December 2005 and paragraph 2 of his affidavit of 29 May 2006 represent the total evidence-in-chief of the applicant as to the scope and content of the skill, work, effort and labour deployed by Mr Pesch as author of the Second Plans to bring into existence original works in which copyright subsists . 50 Ordinarily, the author of each artistic work would identify the plan, explain each of the circumstances which caused the plan to be brought into existence, the precise steps taken to address the inadequacies in the existing plans and those features of each drawing which are the emanation of the work, skill, effort and labour of the author. The applicant in this case has elected to identify the plans by reference to the List of Documents, assert authorship of the 19 plans and plans 185A to 185G and identify the scope and content of the changes to the First Plans by means of inviting a comparison between the pre-existing First Plans and the Second Plans aided by the explanation at paragraph 11 of the affidavit of 22 December 2005 and paragraph 2 of the affidavit of 29 May 2006. 51 However, Mr Pesch gave oral evidence of the development of the plans in suit and the date of creation of changes to the 4 in 1 bucket and the consequential changes to the drawings. It is necessary to closely examine this evidence in assessing the originality of the Second Plans and in determining the date of authorship of those plans. 52 Mr Pesch says this. 162 First , Mr Preece initiated the idea of introducing a 4 in 1 bucket into the respondent's product range because the sales team was receiving requests from customers for a 4 in 1 bucket. It was perceived as a good idea for sales. It was acted upon. The Norm bucket was the major selling bucket in the market at the time. It was a successful bucket. It was what the respondent needed. The process of developing the respondent's bucket began in either October or November 2003. 163 Secondly , Mr Stewart Wright gave an instruction to Mr Arrowsmith to have a look at the old Norm bucket. Mr Wright says that Mr Arrowsmith's inspection of the old Norm bucket was part of a process of evaluation so that Digga could try and work out some costings and get some general ideas of design. Mr Wright in an equivocal way said that he did not have an entirely certain recollection of observing Mr Arrowsmith make rough measurements of the old Norm bucket. Mr Wright says that the processes undertaken by Mr Arrowsmith were to obtain general ideas of design not to copy the bucket. However, Mr Wright says that Mr Arrowsmith was examining the bucket and perhaps making drawings and measurements of some kind, for a costing purpose . The purpose of identifying the costs in context was one of identifying with some precision the cost of making the bucket and thus a precise understanding of the dimensions of the bucket, its componentry, the amount, grade and quality of steel that would be required, the dynamics of the assembly mechanism, the functionality of the bucket and other such matters so that the cost of labour, time and materials could be accurately determined. The respondent would then know the cost of producing such a bucket and thus be in a position to determine a retail and wholesale price for its buckets. 164 Thirdly , since the initiative to introduce a 4 in 1 bucket into the respondent's product range came from the sales team and particularly Mr Preece against the background of Mr Preece's assessment of the sales success by October 2003 of the Norm bucket, it is entirely unlikely that the respondent did not have regard to and inspect the new successful Norm bucket. Mr Wright accepts that the individuals given the task of developing the respondent's bucket would have referred to both the old and the new Norm buckets; that such an approach was logical and that he hoped that they would have looked at more than the old Norm bucket. Mr Wright recognises that Mr Arrowsmith was given a pretty quick time frame to deliver a 'designed' bucket. Mr Wright recognises that new Norm buckets are readily available to the respondent and Mr Preece seems to have been in a position to obtain a new Norm bucket on one or two days' notice. 182 Although I have found that the respondent made conscious use of the applicant's new 4 in 1 bucket and has consciously copied components of the bucket, the court must be satisfied that the respondent reproduced each of the applicant's drawings or a substantial part of them. The test of reproduction is whether there is a sufficient degree of objective similarity between the applicant's drawings and the respondent's drawings ( Francis Day &amp; Hunter Ltd v Bron [1963] Ch. 587 at p 614 per Wilmer LJ; S W Hart &amp; Co Pty Ltd v Edwards Hot Water Systems [1985] HCA 59 ; (1985) 159 CLR 466 at 472 per Gibbs CJ; CIPEC v First Melbourne Securities Pty Ltd [1999] FCA 660 ; (1999) 44 IPR 512 [52] per Merkel J). The question of what amounts to substantial reproduction in any case is not capable of precise definition and is a matter of fact and degree ( Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 All ER 465 at p 473 per Lord Evershed). The question of reproduction is a separate question from causal use and causal copying although the two overlap ( Clarendon Homes (Aust) Pty Ltd v Henley Arch Pty Ltd [1999] FCA 1371 per Heerey, Sundberg and Finkelstein JJ [27]). 183 In CIPEC v First Melbourne Securities (supra), Merkel J [52] noted the principles governing copyright infringement in architectural plans, isolated by his Honour in Henley Arch Pty Ltd v Clarendon Homes Pty Ltd (1998) 41 IPR 443 at 460 and concluded that the same principles apply in determining infringement by reproduction of drawings for the manufacture of three-dimensional components of industrial manufacture (in that case, expansion joints). Those principles recognise that no reproduction arises where substantially similar works are produced through independent efforts; greater weight will be given to the quality of that copied than to its quantity ; in considering the quality of that copied, the simpler and more common place the plans or drawings the more closely must the alleged infringer adhere to the applicant's work; where a significant proportion of the features found in the challenged plan and that of the work in suit are common to all plans for the relevant subject matter, the subsistence of copyright in respect of those features may be limited; and in determining objective similarity, the court will be assisted by expert evidence which is of value in exposing facets of the ultimate question. 217 The pre-condition to the operation of s 77(2) involves four integers. First , the subsistence of copyright in an artistic work. Secondly , the industrial application of a 'corresponding design' by or with the consent of the copyright owner. Thirdly , the sale (or hire or offering for sale) of 'articles' to which the 'corresponding design' has been 'applied' and fourthly , at the time of sale (or hire or offering for sale) of articles to which a corresponding design has been applied industrially, the corresponding design was not registrable under the Designs Act 1906 or had not been registered under that Act. 224 The formulation of s 77(2) at [216] addresses reproduction of the artistic work by applying a design to an article and operates whether the corresponding design was either not registered or not registrable (s 77(1)(d)). Notwithstanding the change to the earlier formulation of s 77(2) and the inherent 'critical question' identified by Franki J partially raised by the earlier formulation, a design for the purposes of s 74 and s 77 under the formulation at [216] remains a design as defined by the Designs Act ( Hosokawa Micron International v Fortune (supra) at 396; Shacklady v Atkins (1994) 30 IPR 387 at 394 and CIPEC v First Melbourne Securities Pty Ltd [1999] FCA 660 at [82] ). 228 The applicant says that this conduct is something quite different from the application of a corresponding design inherent in the artistic work to an article in a way which enables the features of shape or configuration to be seen in a finished article. The applicant says there is no design within the meaning of the Designs Act 1906 and thus no corresponding design and therefore no role to play for s 77(2). That submission ultimately turns on three things. First , whether there is a corresponding design in relation to an artistic work capable of application to an article. Secondly , whether the article in question is the 4 in 1 bucket or alternatively components comprised in an assembled bucket. Thirdly , whether, by reason of the notion of a focus upon 'registrability', the artistic work is deprived of registration as a design because each drawing does not qualify for registration under the Designs Act 1906 as a design. 229 As to the first, it seems to me from an examination of each of the applicant's artistic works in suit and particularly those drawings for the components I have found to be original drawings, namely, drawings for the outside mounting bracket, inside mounting bracket and pivot arms comprising the pivot mechanism, that features of shape or configuration are apparent. Having regard to the evidence of Mr Pesch and that of Mr Gould, the shape of the outside mounting bracket might vary in its configuration having regard to the shape a designer might select. The criticism Mr Gould makes is that whatever shape a designer might select, the real question is whether a range of possible shaped outside mounting brackets will perform the function an outside mounting bracket is required to perform. It seems clear that the designer of the outside mounting bracket has selected the particular shape evident in the applicant's artistic work and in that sense there has been 'room for choice' by Mr Pesch. Mr Pesch gave evidence that the designer could have made one of a number of choices and that the shape selected by the author/designer was made to make the component look better and function more efficiently. As to the pivot mechanism, there is no doubt that the outer pivot arm and cranked inner pivot arm assume the features of shape in very large part to give structural strength to the opening mechanism under hydraulic load. That design change was brought into existence as a result of complaints to Mr Pesch of failures in the bucket under load by users. Clearly, the pivot mechanism with its two arms exhibit features of shape. However, it seems to me that these features are more than a blend of industrial efficiency with visual appeal. These features are very substantially determined by the requirements of strength and configuration for a double arm mechanism to enable the applicant's 4 in 1 bucket to open and close under hydraulic static and dynamic load. The demands of function overwhelm the features of shape for such a utilitarian component of a utilitarian bucket. 230 The notion of appeal to the eye does not necessarily mean aesthetic appeal (although that may well be present in a particular design) but simply means a 'mental conception conveyed to the mind of the eye' ( Dart Industries v D&eacute;cor Corporation Pty Ltd (1989) 15 IPR 403); in that sense, visual differentiation of shape is required. In some cases, the drawings potentially exhibiting a design may be complex such as detailed sectional engineering drawings and the features of shape may therefore be difficult to discern with the result that any element of appeal to the eye is solely based on the functional efficiency of the component (such as an engineering drawing for a sealed expansion joint for a bridge ( CIPEC v First Melbourne Securities (supra)). Although the pivot mechanism exhibits identifiable features of shape, I am satisfied that those features, although they involve some minor element of shape selection, are almost entirely dictated by the utilitarian function that a pivot mechanism must perform in facilitating the separation of the front and back sections of the bucket. In respect of that component therefore, there is no relevant design. However, I take a different view in relation to the inside mounting bracket and accept that the drawing for that component exhibits a design. 237 The protection afforded by s 77(2) of the Copyright Act applies only when a respondent reproduces the applicant's work 'by applying that or any other corresponding design to an article' . An article means any article of manufacture [231] ( Amalgamated Mining Services Pty Ltd v Warman International Ltd (1992) 24 IPR 461. The process of application by the respondent of a corresponding design inherent in the applicant's artistic work involved a particular process. The respondent brought into existence a two-dimensional drawing representing a substantial reproduction of the applicant's work. That two-dimensional reproduction was used by the respondent to enable it to apply the corresponding design in the applicant's drawing to an article of manufacture. The applicant contends that the step of making a two-dimensional drawing which is a reproduction of the applicant's relevant work is not susceptible of protection under s 77(2) ( Amalgamated Mining Services Pty Ltd v Warman International Ltd (supra) at 474; Shacklady v Atkins (1994) 30 IPR 387 at 393; CIPEC v First Melbourne Securities Pty Ltd (supra) at 530), because the statutory immunity applies only in relation to the application of a corresponding design to articles of manufacture. The two-dimensional drawings of the respondent are not articles of manufacture. If this contention has force, it gives rise to a counter-intuitive anomaly of a respondent being free to apply the applicant's industrially applied corresponding design to articles of manufacture yet being constrained by infringement of copyright in the applicant's artistic work in making a two-dimensional drawing as a step along the way to the application of the corresponding design to articles of manufacture. 238 The authorities mentioned above which are said to support the notion that making a two-dimensional drawing as a step along the way to the application of the corresponding design to articles of manufacture is not an infringement of the copyright in the artistic work, require brief examination. In CIPEC v First Melbourne Securities , Merkel J acknowledged that it was common ground between the parties that s 77(2) only applies to three-dimensional reproductions of the drawings in suit and, 'Thus, s 77 has no application to plan to plan copyright infringement: see Shacklady at 393' . Accordingly, there was no controversy about the question between the parties and no contradictor to the proposition that s 77(2) might extend to provide immunity in respect of the two-dimensional drawing. In Shacklady , Davies J accepted that the defence in s 77 'merely concerns itself with three dimensional reproductions in the context of a corresponding design that is applied industrially' . That assumed position was adopted by Davies J in response to a submission that s 77 did not apply in the circumstances of the case because Mr Shacklady's right to enforce his copyright was influenced by a transitional period between the statutory regimes arising out of re-enactment of particular provisions taking effect from 1 October 1990 and one issue was the operation of the section in relation to past events in circumstances where, nevertheless, articles to which the corresponding design had been applied were sold after the commencement of the new provisions. Notwithstanding that contextual question, it is clear that Davies J proceeded on the footing that the immunity provided by s 77(2) only operates in relation to three-dimensional reproductions brought about by application of an industrially applied corresponding design. In Amalgamated Mining v Warman (supra), the facts involved both production of an infringing two-dimensional plan used as a step along the way to application of a corresponding design and use of the applicant's two-dimensional artistic work itself to make the two-dimensional infringing plan used as a step along the way. Nevertheless, Wilcox J accepted that s 77 only provided an immunity, relevantly, in relation to acts 'within the scope of the copyright in the corresponding design' being the aggregate of things that the registered owner of a design would have the exclusive right to exercise. Therefore, s 77 'does not include a sheet of paper whose only function is to carry the design. It follows that the subsection has no application to plan to plan copying. The doing of such a thing is not an infringement of the monopoly in the registered design; it is not "within the scope of the copyright" or "monopoly" "in the corresponding design".' 242 There is one further matter which might have the effect of removing the features of shape from the scope of a design for the purposes of the Designs Act 1906 and, as a result, from the notion of a corresponding design. A design excludes 'a method or principle of construction' . As Merkel J notes in CIPEC v First Melbourne Securities (supra) [95] [98], the relevant principles emerged from the judgment of the High Court in Firmagroup Australia Pty Ltd v Byrne &amp; Davidson Doors (Vic) Pty Ltd [1987] HCA 37 ; (1987) 180 CLR 483 at 488. The notion is that only design features or those features which convey the idea of a particular shape qualify as a design. The contended design will not qualify to provide the proprietor with a monopoly in data or information conveying a method or principle of construction. To the extent that a drawing exhibits features of shape or ornamentation and thus exhibits a design but also contains dimensional data or other technological information facilitative of construction of an article of manufacture, such a drawing nevertheless continues to exhibit a design and is not prevented from falling within the scope of the definition of design merely by reason of the addition of other information. Although Wilcox J took a different view and determined that engineering drawings containing technological data either necessary or desirable for the manufacture of parts for slurry pumps for mining operations were not capable of registration as designs as a method or principle of construction and thus outside the definition of a design, I concur with the view of Merkel J in CIPEC v First Melbourne Securities that such a view adopts too broad an approach to the exclusion. 252 First , an infringement of the copyright in the applicant's drawings for the pivot mechanism, outside mounting bracket, inside mounting bracket and front assembly drawing in the period 2 December 2003 to 17 June 2004 by the respondent making a two-dimensional reproduction of those drawings. 253 Secondly , an infringement of the copyright in the applicant's drawing for the pivot mechanism by the respondent making a two-dimensional reproduction of that work and a three-dimensional component effecting a substantial reproduction of the drawing, from 2 December 2003 to trial. 254 The question is, what measure of damage should be awarded in respect of these acts of infringement in order to provide reasonable compensation to the applicant. 267 First , examine the number of sales made by the respondent of the relevant 4 in 1 buckets. 268 Secondly, assume that since Digga was trying to meet the market leader by introducing its 4 in 1 bucket, it was at least trying to capture sales from the supply side market leader (and no doubt from other suppliers). 269 Thirdly , assume that the number of sales actually made by the respondent represents sales, on balance, the applicant would have made, as a starting point.