Case: Polyaire Pty Ltd v K-Aire Pty Ltd &amp; Ors [2005] HCA 32 ; (2005) 221 CLR 287
Outcome: cited
His Honour's Reasons reflect the following observations concerning his Honour's assessment of the evidence before him and the legal issues: (a) The Applicant applied for the Registered Design on 24 December 2001. The Registered Design was granted on 27 May 2003 and since September 2004 Midamarine has, through arrangements with a licensee, Britz Innovation Pty Ltd ('Britz Innovation') and a related company Kalinin Pty Ltd ('Kalinin'), a company trading as 'Britz Marketing', been selling an inflatable surfcraft described as the ' Wavestar '. The Applicant also sells another surfcraft article described as the ' Surfster '. (b) The Applicant contends that the Wavestar is an embodiment of the Registered Design. (c) In June 2005, Mr Russell Joel Binkin ('Mr Binkin'), 'an associate of the applicant, provided a sample of the Wavestar to Mr Corrick and endeavoured to persuade him that he should licence the design of the Wavestar from the applicant. Mr Corrick was provided with artwork, which came from the applicant. I am satisfied that the sample of the Wavestar and the artwork contained clear notification of a Registered Design, and the artwork and sample contained the Warning which presently appears on the physical exhibit of the Wavestar. It is to be expected, I would have thought, that there was copyright in somebody in that formulation of the Warning.' [6] (d) 'After the meeting and the supply of the sample and artwork, Mr Corrick indicated he was not interested in pursuing a licence for the product.' [7] (e) In January 2006, Midamarine and Britz Marketing entered into an exclusive distributorship in relation to the Wavestar surfcraft. In February 2006, Mr Corrick commenced negotiations with the National Rugby League ('NRL') and the Australian Football League ('AFL') to use the trade marks of NRL and AFL sporting teams on surfcraft or surf mats. (f) On 8 September 2006, a director of Midamarine, Mr Michael Arenson, learnt that DMC was supplying a surfcraft article to 'Amart All Sports' which was said by Mr Arenson to be strikingly similar to the Wavestar . (g) On 22 September 2006, Mr Arenson saw a reproduction of the DMC article. Mr Arenson spoke to Mr Corrick and wrote a letter to him on 24 September 2006 drawing his attention to the similarities in the design features between the Wavestar article and the DMC article. Mr Arenson drew Mr Corrick's attention to the fact that the warning label endorsed on the DMC article was a direct copy of the Warning Notice on the Wavestar article. In particular, Mr Arenson drew Mr Corrick's attention to the reproduction on the DMC article of the claim, 'The shape of this inflated product is a Registered Design' . (h) On 27 September 2006, the solicitors for DMC applied to register a design of a surfcraft in the name of DMC and, in that Application, Mr Corrick was described as the designer. His Honour observed that: 'No documents supporting his design exist, for the good reason that, in fact, the DMC product is a direct and complete copy of the Wavestar. ' [11] (i) His Honour noted: 'It is now conceded that the DMC surf mat is indeed a copy - and a deliberate copy of the Wavestar ' . This, in my view, had to be so. The visual comparison leads to that conclusion. The fact that the Wavestar was left with Mr Corrick, the comparison of the two and the identity of the words used in the Warning on the back of the DMC surf mat and, in particular, "the shape of this inflatable product is a Registered Design", lead inevitably to the conclusion that the DMC product is a direct copy of the Wavestar '. [12] 'The words on the Wavestar reflect the contention by Mr Arenson that the Wavestar is an embodiment of the Registered Design. The presence of those words on the DMC product is, in my opinion, damning evidence of copying by DMC of the Wavestar.' [13] (j) Counsel for DMC contended that the Wavestar is not an embodiment of the Registered Design and in any event, the Registered Design is invalid. As to the latter question, his Honour concluded that for interlocutory purposes, the Applicant is to be treated as the owner of a valid Registered Design having regard to differences in the features of shape reflected in the examples of prior art. 'Indeed, the attack on the validity of the Registered Design is seriously undermined by DMC's own application for registration of the design of the DMC product, which application is tainted with dishonesty and fraudulent claims. I accept that it has been acknowledged that the application will be withdrawn or otherwise expunged.' [16] (l) His Honour addressed Midamarine's contention that DMC had applied the Registered Design or a fraudulent or obvious imitation of the Registered Design to articles sold and offered for sale by DMC. At [23], the features of shape, configuration, pattern or ornamentation contained within the Registered Design, capable of being judged by the eye, are identified by his Honour. At [24], his Honour observes, 'I have inspected the inflated DMC product and compared it with the Registered Design. The inflated DMC product possesses each of the features identified in the Applicant's written submissions (those identified at [23]), with the exception that the handles do not protrude from the top of the surf mat as depicted in the Registered Design. The handles on the Wavestar also do not protrude from the top of the surf mat, as depicted in the Registered Design. His Honour concluded that, 'For present purposes, being the interlocutory purposes, I am satisfied that, to the eye, the shape of the DMC product is substantially the same as that of the Registered Design. It is, in my opinion, strongly arguable that the design, which has been applied to the DMC product, is an obvious imitation of the Registered Design. That is, in the words of the test in Malleys (Malleys Ltd v J W Tomlin Pty Limited [1961-62] 35 ALJR 352) , to be found at p 354 of the report: "Not the same but a copy apparent to the eye notwithstanding slight differences".' [27] (m) His Honour observed that even if the design applied to the DMC article is not an obvious imitation of the Registered Design, the test for fraudulent imitation is even more strongly arguable [28]. His Honour identified the tests approved by the High Court in Polyaire Pty Ltd v K-Aire Pty Ltd &amp; Ors [2005] HCA 32 ; (2005) 221 CLR 287 and the High Court's approval of the observations of Lehane J in Koninklijke Philips Electronics NV &amp; Anor v Remington Products Australia Pty Ltd [1999] FCA 816 ; (1999) 91 FCR 167. His Honour concluded: 'I am satisfied that there is a strongly arguable case of fraudulent imitation. It seems inevitable that, if the Wavestar is an embodiment of the Registered Design, then the DMC product is a fraudulent imitation. The design of the Wavestar and the DMC product is almost identical. It could not have been independently created. It is now admitted that the DMC product is a copy of the Wavestar .' [31] 'So, also, is the embarrassing identity of the direct words of the warning label, including the imprinting of the words: "The shape of this inflatable product is a Registered Design". ' (n) At [33], his Honour said this: 'It is not denied that Mr Corrick was supplied with a sample of the Wavestar surf mat and had discussed obtaining a licence of the design. It seems plain that there is a strongly arguable case of obvious imitation or fraudulent imitation of the Registered Design.' (o) On the question of the balance of convenience, his Honour considered the observations of the High Court in Beecham Group Limited v Bristol Laboratories Pty Limited [1968] HCA 1 ; (1967-68) 118 CLR 618 at 625 and the principles affirmed by the High Court in Australian Broadcasting Corporation v O'Neill [2006] HCA 46 and weighed in the balance the implications arising out of a consideration that DMC had 'in the face of warnings' from Midamarine and 'with eyes wide open' embarked upon a course of importing, selling and offering for sale articles to which a fraudulent or obvious imitation of the Registered Design had been applied. At [39], his Honour said this: 'In my judgment, the balance of convenience strongly favours the grant of the injunction sought. The chronology of events, and in particular the history of the design of the DMC product that is to say no design, but a direct copy indicates that the respondents have decided to import and distribute the DMC product with their eyes open to the likely consequences of so doing.' (p) At [40], his Honour further referred to submissions by counsel for Midamarine and quoted this submission, 'No reasonable trader, having received the sales pitch from Mr Binkin [in June 2005] for the Wavestar , could reasonably ignore the existence of the rights [claimed in the design]' . (The words in the square brackets are explanatory words inserted into counsel's submission by his Honour). (q) As to the question of damage accruing to Midamarine, his Honour said this: 'In this particular case, the applicant is shown to be an established manufacturer and supplier of the Wavestar surf mats. It is strongly arguable that that product has the benefit of the protection of the Registered Design. It has been creating a market for its product and supplying its product to distributors since 2004. [35]. 'Earlier this year, the applicant entered into an exclusive distributor arrangement with Britz Marketing. I accept that its fortunes are tied to its ability to distribute its products via Britz Marketing. The Wavestar is now exclusively sold by Britz Marketing under the name Wahu Wavetube . That surf mat is sold in an extensive range of shops, including Toyworld, Big W, Rebel Sports, Target and Toy'R'Us. Mr Britz says the Wahu Wavetube has been heavily promoted'. [36] 'Since the First Respondent [DMC] began, in October 2006, to sell the DMC product, Amart All Sports has ceased all sales of the Wahu Wavetube and has acquired, instead, the DMC product. I accept that the inability to sell surf mats to the applicant's design to Amart has a significant impact on the ability of the applicant to make sales.' (r) On the question of an assessment of potential wider injury, his Honour concluded that, 'There is a serious over-statement of those risks in the evidence on behalf of the applicant'. [38] His Honour concluded that there was 'a deal of exaggeration in the injury inherent' in the contentions of Mr Britz that Britz Marketing would have to give serious consideration to sourcing surf mats from a different and cheaper source than Midamarine if DMC products continued to be sold. (s) At [41], his Honour reached this conclusionary observation, 'The strength of the applicant's case of deliberate copying by the first respondent favours the grant of the interlocutory injunction. The impugned DMC products are clearly and objectively a deliberate copy of the Wavestar . The person responsible for the design and manufacturer of the DMC product knew that the product was a copy of the Wavestar , and knew of the claim that the design of the Wavestar product was protected by a Registered Design. In those circumstances, it seems to me that DMC has embarked on a task of ordering and importing the impugned products with its eyes wide open as to the potential consequences of so doing, namely, that it will be exposed to the present application.'