Case: R &amp; A Bailey &amp; Co Ltd v Boccaccio Pty Ltd (1986) 4 NSWLR 701
Outcome: referred to
The 1998 amendment of the Act to provide an exception in s 44C so that a label in which copyright subsisted would not be able to control the use of the goods to which the label was attached was prompted by the decision of Young J in the Supreme Court of New South Wales in R &amp; A Bailey &amp; Co Ltd v Boccaccio Pty Ltd (1986) 4 NSWLR 701; 77 ALR 177. There, a manufacturer produced a liqueur known as 'Baileys Original Irish Cream' in the Republic of Ireland and sold it to various distributors around the world. The Australian distributor did not sell the liqueur to the defendant, which had imported its supplies of the liqueur from Baileys' Dutch distributor. The manufacturer and Australian distributor sought to restrain the importer from further importations and sales in Australia. Young J found that the label was exempt from registration under the then provisions of the Designs Act 1906 (Cth) ( Bailey 4 NSWLR at 711C). He also held that there was no infringement of Baileys' trade mark by the importation. There was no dispute that the sticker forming the label on the bottles of the liqueur imported via the Dutch distributor contained an artistic work, being a painting depicting a country scene, the copyright of which was vested in Baileys or its Australian distributor. There was no express licence by the copyright holder for the use by the importer of the artistic work depicted on the labels appearing on the bottles imported from Holland. Young J found that the importation into, and sale of the Dutch bottles in, Australia was a breach of the copyright in the labels. Thus, only because the plaintiffs controlled the copyright in the painting on the label, they could restrain the importation and sale of the liqueur in the bottles on which the label appeared. 53 Young J's decision led to recommendations for the reform of the law by the Copyright Law Review Committee. The Importation Provisions of the Copyright Act 1968 (AGPS, Canberra, 1988) reported at p 224 [181]: '181. The Committee is strongly of opinion that distributors of goods should not be able to control the market for their products by resorting to the subterfuge of devising a label or a package in which copyright will subsist . The purpose of copyright is to protect articles which are truly copyright articles such as books, sound recordings or films. This purpose is achieved by conferring on authors of works and makers of subject matter a bundle of exclusive rights entitling them to restrain conduct antipathetical to their incorporeal property and to sue for damages where such conduct has already been committed. If the simple expedient of affixing or attaching a label in which copyright subsists to any goods at all entitles the owner of the goods to exclude others from marketing similar goods, the sooner the practice is stopped the better it will be. However imaginatively labelled or packaged a bottle of liquor may be, the product is liquor . The same may be said of cigarettes, perfume and cosmetics.' (Emphasis added.) 54 The committee noted that abuses could be remedied by resort to causes of action for passing-off, breaches of s 52 of the Trade Practices Act or for infringement of the trade mark. In the present case, the product or article is the garment. In this regard, Polo/Lauren could not seek to prevent the garment being imported into Australia under the Copyright Act if the polo player logo were not embroidered onto its external surface. 55 In 1997 the Copyright Amendment Bill 1997 (Cth) was introduced to amend the Act. It provided in the proposed s 44C for a new exception of a non-infringing accessory. The Attorney-General circulated an explanatory memorandum for these amendments. It recorded in its introduction that the Bill was proposed to amend the law to prevent the owner of copyright in packaging and labelling of goods, not themselves protected by copyright, from using that copyright to stop anyone from importing the goods (see p 3 of the explanatory memorandum for the Copyright Amendment Bill 1997 , introduced into the House of Representatives on 18 June 1997). 56 The explanatory memorandum, when dealing with the amendments relating to labelling and packaging of imported goods, referred to the 1988 report of the Copyright Law Review Committee. It noted that the practice of controlling importation of goods through copyright in the artistic and/or literary works on the packaging or label was believed (in 1997) to have been quite widespread in industries such as the liquor and toy industries and continued: '... [o]ther industries such as footwear and sunglasses also have reported incidences of this practice. Removal of the ability to use copyright in this way would eliminate one of the means by which exclusive market access is able to be provided to certain distributors of such goods and would implement a recommendation of the Copyright Law Review Committee.' After reviewing a range of options, the explanatory memorandum commented upon the proposed clauses of the bill (at [119]-[122]). Then having referred to the decision in Bailey 4 NSWLR 701, it said (at [122]): ' In essence the amendments will allow the importation of goods with copyright packaging or labelling without the permission of the copyright owner, if the owner of the copyright had agreed to the use of the copyright material with the goods. The amendments will not, however, affect the operation of the law governing trade marks, insofar as the packaging or labelling includes a trade mark. ' 57 A non-infringing accessory, as defined in s 10(1), such as a label placed on an article in the country of manufacture with the consent of the person entitled to the copyright in that label or accessory, is removed from any exclusive right in the artistic work which, but for s 44C, would otherwise be conferred by the Act on the owner of the copyright. Thus s 44C(1) of the Act removes from the scope of the exclusive right protected by s 37(1), copyright in a work which falls within the meaning of a non-infringing accessory in s 10(1). And s 44C(2) modifies the operation of the exclusive right in s 38(1) in a similar way. The two exceptions in s 44C require relevantly that first, the artistic work (here, the polo player logo) must have been used in the country of manufacture with the licence of the person entitled there to the copyright by embroidering or weaving it onto an article (here, a garment) and, secondly, it be an accessory (as defined: here, a label) to the article which is imported into Australia. 58 The definition of an 'accessory' in s 10(1) recognises a distinction between the article as a functional item of commerce, and a subsidiary constituent part of the article such as a label embroidered on to it. The embroidered component is functionally accessorial to the article's use. The function which an accessory, as described in pars (a) (d) of the definition of 'accessory' in s 10(1), performs is incidental to the use of the article as an item of commerce. The article can be used for its intended purpose regardless of whether the s 10 'accessory' is present on it or as part of it. The Parliament intended that a non-infringing accessory, as defined in s 10(1), could be embroidered into an article even though, had the non-infringing accessory been sold by itself without the article, the owner of copyright in it would have been entitled to protection in Australia under the Copyright Act . 59 The word 'label' as used in par (a) of the definition of 'accessory' in s 10(1) should be given a meaning distinct from that provided by other paragraphs of the definition, such as the 'written instruction, warranty or other information provided with the article' referred to in par (d): ASIC v DB Management Pty Ltd [2000] HCA 7 ; (2000) 199 CLR 321 at 338 [34] - [35] per Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ. 'Other information' referred to in par (d) would include the descriptions on the navy-blue and silver embroidered internal labels on the articles in Exhibits A to P (including the scarf, where those labels appear on its exterior surface). Likewise par (c) of that definition would catch the use of the copyright in the painting the subject of the decision in Bailey 4 NSWLR 701. 62 I am of opinion that the 1998 amendments to the Copyright Act were designed to prevent this inappropriate use of copyright. The Parliament had been informed, when making those amendments, that other industries including the footwear and sunglasses industries had developed similar practices to those in Bailey 4 NSWLR 701. The polo player logo, used in the way it is in the 15 exhibits, is affixed to or displayed on or incorporated into the surface of the accompanying article, within the meaning of par (a) of the definition of 'accessory' in s 10(1) of the Act. The polo player logo conveys to anyone who looks at the garment a message of its provenance: ie, it is a product of the Ralph Lauren design or fashion house or 'label'. The definitions of 'accessory' in s 10(1) recognise that such a use can take a variety of forms but is not confined simply to external packaging or internal marking. The polo player logo embroidered on an article of clothing is the 'label' of the design or fashion house, Ralph Lauren, on it. The embroidered polo player logo conveys at once that the article is authentic and is the 'label' of a Ralph Lauren garment. In this practical manner it 'labels' the garment as a product of that design or fashion house. 63 The embroidered polo player logo is not primarily a decorative feature, although it can be attractive to the eye in some of its manifestations. The polo player logo will usually remain covered by the wearer's outer clothing when it appears on the hem of an item of underwear, such as in Ex O. This may not always be the case, but this positioning of the polo player logo suggests that, at least on such a garment, its function is primarily to signify the manufacturer's identity, ie to act as a label. 64 The embroidered polo player logo on an article of clothing acts as a symbol to convey that the clothing was made by the Ralph Lauren design or fashion house. It is a 'signature' or label conveying that information of the garment's provenance. The purpose of s 44C was to prevent such a symbol being used to deny the article its ordinary use as clothing simply because the polo player logo is copyright. The owner of the trade mark and the person entitled to the goodwill of, or associated with, the polo player logo is adequately protected by the rights given under both under the Trade Marks Act and by the tort of passing off from wrongful exploitation by another person of that trade mark or symbol associating the goods with the provenance of the fashion or design house of Ralph Lauren.