Case: Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589
Outcome: referred to
The applicants also sought general damages on an alternative basis. As I stated in Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589 (" New Cover "), in a case of design infringement, general damages may be awarded on the basis of the diminution of the value of the Review Design as a chose in action. The manner in which such damages are to be assessed is discussed in New Cover and applies in this case as well. As in New Cover , there is no satisfactory evidence as to the sales history of the Review Design, but there is some evidence as to the value to Review of its designs and the image they created. Adopting the approach as outlined in New Cover , if it had been necessary to do so, I would have assessed the effect of infringement at the time it occurred (and had it been made out) on the potential market for the Review Dress at $3,500. 70 In the circumstances of this case, had the claim for infringement been made out, a further question would have arisen as to whether Redberry could successfully invoke s 75(2)(b) of the Designs Act. 71 Kun Ming Liu, Redberry's managing director, secretary and shareholder, gave evidence that Redberry sourced its garments from China, where other persons manufactured them, and imported them into Australia for wholesale sale. Mr Liu's evidence was that Redberry, through its buyer, bought ready-made garments or commissioned garments after having seen the manufacturer's sample. Mr Liu denied that Redberry arranged for the manufacture of any particular garment. He was unable to say, however, whether the Redberry garments in question in this case had been bought ready-made or commissioned after the buyer was given a sample. 72 Mr Liu stated that, at the time of trial, Redberry employed a buyer named Sui Qiang Ke to select garments from suppliers and manufacturers in Guangzhou, but that Mr Ke had not bought the Redberry garment. Mr Liu stated that, between February 2006 and February 2007, Redberry had employed another person based in China to assist Mr Ke, by the name of Qi Hong Wang. Mr Liu's evidence was that Ms Wang had not worked for Redberry since that time and he had been unable to contact her. By implication, it was Ms Wang who had been the buyer for the Redberry garments. 73 There was no evidence, documentary or otherwise, identifying the manufacturer in China of the Redberry garments. Mr Liu sought to explain what might be seen as an evidentiary deficiency by reference to the failure to find Ms Wang. Further, Mr Liu's evidence was that Redberry did not keep records beyond five years (a period corresponding with taxation law provisions). This did not, however, explain the lack of records that would have identified the manufacturer of the Redberry garments since the documents in question would presumably have related to a period less than five years ago. I accept that the deficiencies in the documentary record produced to the Court were thus not adequately explained. These deficiencies weighed against accepting Mr Liu's evidence. 74 On balance, however, whilst there were some unexplained deficiencies and inconsistencies in Mr Liu's evidence, I would ultimately accept his evidence as essentially truthful. The applicants failed to persuade me that I should not do so. As I have said, Mr Liu was (amongst other things) Redberry's managing director and was knowledgeable about the generality of his company's business. Difficulties with his evidence arose from the fact that he had virtually no facility in English language. I formed the impression that, overall, he gave his evidence truthfully even if this reflected his distinctive and perhaps culturally-conditioned understanding of what had occurred and what was required in answering the questions addressed to him. I accept that Redberry did not employ its employees to make the garments in question. Mr Liu's evidence left open the possibility, however, that Redberry commissioned another person to make the garments to a sample that Redberry's buyer had been shown. Accordingly, had the buyer's direction to make the garments and/or the making of the garments taken place in Australia , then Redberry might properly have been regarded as having made the garments in contravention of s 71(1)(a) of the Designs Act. In this event, Redberry would have been liable for a primary infringement, as opposed to a secondary infringement and Redberry would have been unable to rely on s 75(2)(b) of the Designs Act. I discuss below the significance of the fact that, on Mr Liu's evidence, the buyer commissioned the making of the garments in China , where the garments were manufactured. 83 The applicants sought additional damages under s 75(3) of the Designs Act. I would not regard such additional damages as having been warranted, even if the infringement claim were made out. I refer to the general principles concerning additional damages as outlined in New Cover at [53]. 84 If Redberry infringed, its conduct in importing and selling the Redberry garments in July 2006 was in ignorance of Review 2's design rights and at a time when the existence of such rights had only briefly been a matter of public record. Redberry's infringing conduct (if this is what it was) could not on any view be considered flagrant: see also [79] above. Redberry apparently ceased the conduct of which the applicants complain when it became aware of their claim and, in any case, before the issue of proceedings. The amount of profit to Redberry was modest less than $2000. 85 In substance, the applicants' case on additional damages rested on allegations as to the "the closeness of copying" and that it was "the apparent business practice of Redberry and/or related entities to engage in copying the garment designs of other designers". Ultimately, notwithstanding the submissions of the applicants' counsel to the contrary, I would regard the evidence designed to support these allegations as irrelevant and, therefore, inadmissible. Put another way, the evidence that the applicants sought to have admitted under s 97 of the Evidence Act 1995 (Cth) is not so admissible because it would not have the significant probative value that the provision requires. Two of the applicants' other garments were the subject of specific cross-examination. PS 10 and PS 13 and PS 11 and PS 14 (being two sets of identical Review and Redberry garments) were put to Mr Liu in cross-examination and he conceded, as indeed he had to do, that they were very much the same. Indeed, they were plainly identical or virtually identical. At most, however, this evidence, if admissible, established that, on at least two occasions, Redberry had imported and sold by wholesale garments that were copies of Review garments. (Other labels were also canvassed in cross-examination, but nothing additional need be said about this.) In the designs context, copying per se is not unlawful, however, and does not establish a design infringement.