Review
2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588
FEDERAL COURT OF
AUSTRALIA
KENNY
J
KENNsY
J:
1
On 5 July 2006, Review 2 Pty
Ltd (in liquidation) (“Review 2”) was registered as the owner of Design
Registration No 307708 (“the Review Design”) under the Designs Act 2003 (Cth) (“the Designs
Act”).
2
On 28 February 2007, as part of
a corporate restructure, Review 2 transferred its business and ownership of the
Review Design to Review Australia Pty Ltd (“Review”), which was at that time
known as Review Holdings Pty Ltd. On 13 June 2007, Review 2 appointed
liquidators for the purpose of a members’ voluntary winding up pursuant to Div 2 of Pt 5.5 of the Corporations
Act 2001 (Cth). This is an action for design
infringement and a cross-claim for design invalidity. For the reasons stated
below, I would dismiss both the action for infringement and the cross-claim for
invalidity.
3
Review 2 and Review allege that
Redberry Enterprise Pty Ltd (“Redberry”)
made, imported and sold a dress in infringement of the Review Design. Various
forms of relief are sought, including declaratory and injunctive relief, and
damages. Three principal questions arise:
(1)
Has Redberry
infringed the Review Design?
(2)
Is the Review Design valid?
(3)
If yes to these two questions,
how should damages be assessed?
4
As depicted on the Register and
in the Certificate of Registration, the Review Design is for a sleeveless, cross-over
(or fixed-wrap) dress, having:
·
a V-neck, made by a cross-over from
left to right over a right to left cross-over;
·
a left to right cross-over from
shoulder to the left side of the waist with gathering on the left side of the
waist;
·
some gathering on both
shoulders;
·
figure hugging effect to the
waist with a brown ribbon sash tying around a fixed waist;
·
a square high back;
·
a panelled skirt (3 panels in
the front and panels in the back);
·
a hem knee-length or below the
knee;
·
a figure hugging skirt for over
half the way to the hem, when it sharply expands, so that the dress at the hem
has a ruffled effect; and
·
a patterned fabric in natural
tones with orange, brown and blue fine ‘fronds leaf’ pattern, with an African
or tropical look.
5
Until 28 February 2007, Review
2 was a designer and retailer of women’s clothing, especially for what one of
its founding directors described as fashion conscious women in their 20s and
30s. In January 2005, Review 2 operated 12 retail stores where it sold its
clothing and accessories under the “Review” name. It also sold its clothing
under the “Review” name at about 10 sites within the Myer Grace Bros. stores. At
trial in February 2008, Review operated 17 Review retail stores and 23 Myer
concessions. Review clothing was sold exclusively in these stores and sites,
and was not available elsewhere. Review designed 95% to 97% of the goods that it
sold.
6
In July 2005, Ms Jayne Ellis, then
a director and designer for Review 2, designed a dress with style number R7811 for
retail distribution by Review 2. The design for the dress (“the Review Dress”) was
included in a number of representations that were the subject of a design
application made by Review 2. The application, which was made on 11 August 2005
pursuant to s 21 of the Designs Act, resulted in the grant of registration for
the Review Design. The Registrar recorded the product to which the Review
Design related as “ladies garments”. There was no statement of newness and
distinctiveness provided. The Review Design was certified as examined on 25
October 2006. A dress made to the Review Design retailed for $169.95.
7
Redberry is an importer and wholesaler engaged in the wholesale distribution
and sale of women’s clothing. On 1 September 2006, an employee of Review 2
attended a store named “Daree Mae” located at the Metcentre on George Street in Sydney and purchased a
garment labelled “Redberry” with the style number
63327 (“the Redberry garment”) for $59. The
applicants allege that the Redberry garment was
substantially similar in overall impression to the Review Design.
8
The Redberry
garment is a sleeveless fixed-wrap or cross-over dress. The fabric from which
it is made crosses over at the neckline (creating a V-neck) in the same way as
the Review Design and falls down to the left side of the waist, where it is
gathered. The dress has gathering at the shoulders just like the Review Design.
The Redberry dress has a fitted waist and a square
high back. At the waist, it has a brown satin ribbon as a tie. The skirt is an
A-line, being comprised of one piece of fabric at the front and one piece of
fabric at the back. The skirt is not fitted and ends at or below the knee. The Redberry dress is chocolate brown with a bold floral
pattern of leaves in light cream, peach and brown.
9
When this proceeding was
instituted, the applicants joined not only Redberry
but also Mitex Australia Pty Ltd (“Mitex”) and Chisada Mimi Jamieson
(“Jamieson”), the retailers allegedly involved in the retail sale of infringing
garments. The claims against Mitex and Jamieson were later
settled and the applicants discontinued the proceedings against them.
10
The solicitors for the
applicants wrote to Redberry about the sale and
purchase of the Redberry garment on 21 September 2006
and 22 December 2006, before this proceeding was begun. In its amended
statement of claim dated 14 August 2007, the applicants alleged that Redberry had, without its licence or authority, made,
imported and sold garments embodying a design that was substantially similar in
overall impression to the Review Design. In summary, the applicants’ case was
that Redberry had bought the Review Dress, sent it to
China where Redberry had had it copied, and imported
the copied garments into Australia for sale. In opening and closing
submissions, both oral and written, and in Amended Particulars of Loss and
Damage, both applicants claimed damages (and not an account of profits). I
assess their damages claim on this basis since this is how they conducted their
case at trial.
11
Redberry admits that the Redberry garment was part
of a consignment of 133 identical Redberry garments
that Redberry imported and sold in Australia in July
and August 2006. It admits a wholesale price of $20. In its Amended Defence dated
29 November 2007, Redberry denied the balance of the applicants’
claims against it, including that it manufactured the Redberry
garments and that the Redberry garments were
substantially similar in overall impression to the Review Design. Further, Redberry claimed that, at the time of the alleged
infringement, it was not aware and could not reasonably have been expected to
be aware that the Review Design was registered. In its cross-claim, it alleged
that the Review Design was invalid.
12
In accordance with orders made
on 13 December 2007, the evidence in proceeding VID 287 of 2007 in so far as it
relates to the Review Design was also evidence in this proceeding.
13
The Designs Act, which came
into effect on 17 June 2004, replaced the Designs
Act 1906 (Cth). The Designs Act provides for a
system of registration for products whose appearance is new and distinctive.
14
The registered owner of a
registered design has a number of exclusive rights, during the term of the
registration of the design, including to make a product, in relation to which
the design is registered, which embodies the design; to import such a product
into Australia for sale; and to sell such a product: see the Designs Act, s 10.
Design, in relation to a product, is defined in the Designs Act as “the overall
appearance of the product resulting from one or more visual features of the
product”: see s 5. In the Designs Act, visual feature, in relation to a
product, includes shape, configuration, pattern and ornamentation of the
product: see ss 7 and 8. These are the features to be
borne in mind in forming a view about the overall appearance of the product (in
this case, a garment) as it appears on the design register. The Designs Act (in
s 7(3)) specifically provides that neither the feel of the product nor the
materials used in the product are visual features of the product.
15
Under the Designs Act, a design
is a registrable design if the design is new and distinctive when compared with
the prior art base for the design as it existed before the priority date of the
design: see s 15(1). The prior art base, which is defined in s 15(2),
includes designs published within and outside Australia. A design is new unless
it is identical to a design that forms part of the prior art base for the
design, and distinctive unless it is substantially similar in overall
impression to a design that forms part of the prior art base for the design:
see s 16(1) and (2).
16
A person infringes a registered
design if, during the term of the registration of the design, and without the
licence or authority of the registered owner of the design, the person: (a) makes
a product, in relation to which the design is registered, being a product that
embodies a design that is substantially similar in overall impression to, the
registered design; or (b) imports such a product into Australia for sale; or
(c) sells or offers to sell such product: see s 71(1).
17
The applicants alleged, and Redberry denied, that Redberry
made, imported and sold the Redberry garments. Redberry’s stated position throughout the case was that it
was an importer and wholesaler engaged in the wholesale sale of women’s
clothing. This issue does not affect the outcome of the applicants’ principal
allegation that Redberry has infringed the Review
Design. It affects the discussion of s 75(2) of the Designs Act, below.
18
Whether Redberry
is a manufacturer, or simply an importer and wholesaler, the Redberry garments will infringe the Review Design if they
embody a design that is substantially similar in overall impression to the Review
Design: compare the Designs Act, s 71(1)(a). In determining whether a design is
substantially similar in overall impression to a registered design, the factors
in s 19 fall for consideration: see s 71(3). Section 19 provides:
(1) If a person is required by this Act to
decide whether a design is substantially similar in overall impression to
another design, the person making the decision is to give more weight to
similarities between the designs than to differences between them.
(2) The person must also:
(a) have regard to the state of development of
the prior art base for the design; and
(b) if the design application in which the
design was disclosed included a statement (a statement of newness and
distinctiveness) identifying particular visual features of the design as new
and distinctive:
(i) have
particular regard to those features; and
(ii) if those features relate to only part of
the design – have particular regard to that part of the design, but in the
context of the design as a whole; and
(c)
if only part of the
design is substantially similar to another design, have regard to the amount,
quality and importance of that part in the context of the design as a whole;
and
(d)
have regard to the
freedom of the creator of the design to innovate.
(3) If the design application in which the
design was disclosed did not include a statement of newness and distinctiveness
in respect of particular visual features of the design, the person must have
regard to the appearance of the design as a whole.
(4) In applying subsections (1), (2) and (3),
the person must apply the standard of a person who is familiar with the product
to which the design relates, or products similar to the product to which the
design relates (the standard of the informed user).
(5) In this section, a reference to a person
includes a reference to a court.
Since
there was no statement of newness and distinctiveness in the Review Design
application, s 19(3) of the Designs Act applies. In considering whether
the design embodied in the Redberry garment is
substantially similar in overall impression to the Review Design, the Court is
therefore obliged to consider the appearance of the Review Design as a whole,
considered by reference to the standard of the informed user.
19
Who is the informed user? Plainly,
the informed user must be a person who is familiar with the product to which
the design in question relates. Moreover, the informed user must be a user of the class of product in question, in this case, ladies’
garments, or perhaps, more narrowly, ladies’ dresses. A designer or
manufacturer of such garments is not an informed user merely because he or she
designs or manufactures them. Further, this user is not simply an ordinary
consumer: the user must be an informed
user.
20
The Australian Law Reform
Commission’s Report No 74, Designs (Sydney, 1995), (“ALRC Report No
74”) and the Designs Act which implemented it (see Explanatory Memorandum to
the Designs Bill 2002 at 1) borrowed
the concept of the informed user from the European Community design law: see
ALRC Report No 74, at 5.17 - 5.21, 6.12 and 6.13. ALRC Report No 74, at 5.17,
described the informed user as “a person who is reasonably familiar with the
nature, appearance and use of products of the relevant kind”. ALRC Report No 74
stated (at 5.18):
Defining the informed user. The EC proposed Council Regulation illustrates the concept of the ‘informed
user’. Under that Regulation it depends on the product as to who the informed
user will be. For example, for car spare parts the informed user may be the
mechanic or repairer who replaces the part. For consumer items it may be the
consumer who buys the item. The EU has said that the informed user means the ‘most
appropriate assessor of distinctiveness is the person or group for whom the
design is intended’. The EU takes the view that an informed user knows the
product to which the design is applied or in which it is incorporated and the
relevant trade or industry to which it belongs.
ALRC
Report No 74 considered that “[d]istinctiveness
should be determined by users of the design rather than design experts” (at
5.19). Relevantly, for present purposes, the Report added (at 5.21):
Whether or not a
design is distinctive is intended to be an objective test. The court decides
the issue by placing itself in the position of an informed user. It is not a
subjective test whereby an ‘informed user’ assesses distinctiveness by
reference to his or her own knowledge and the court simply adopts the informed
user’s assessment. It is still a matter for determination by the court. The
informed user describes the standard to be applied not who can give evidence.
ALRC
Report No 74 drew these ideas together, saying (at 6.13):
The informed user
will usually be the consumer or person using the design article, depending on
the nature of the decision, but will not be a design expert. For example, the
informed user of car replacement parts may be the mechanic who repairs the
vehicle, but for domestic items it may be the consumer.
21
The Registered Designs Act 1949 (UK) adopted the concept of the
informed user, with the consequence that UK courts can provide some guidance in
this country. The first useful judicial exposition of the informed user
standard in England appears to be that of his Honour Judge Fysh
QC, sitting as the UK Patents County Court, in Woodhouse UK Plc v Architectural Lighting Systems [2006] RPC 1 (“Architectural Lighting”). In Architectural Lighting, his Honour (at
[50]) defined the informed user as follows:
First, this notional
person must obviously be a user of
articles of the sort which is subject of the registered design – and I would
think, a regular user at that. He could thus be a consumer or buyer or be
otherwise familiar with the subject matter say, through use at work. The
quality smacks of practical considerations. In my view the informed user is
first, a person to whom the design is directed. Evidently he is not a
manufacturer of the articles and both counsel roundly rejected the candidature
of ‘the man in the street’. ‘Informed’
to my mind adds a notion of familiarity with the relevant rather more than what
one might expect of the average consumer; it imports the notion of ‘what’s about
in the market?’ and ‘what has been about in the recent past?’ I do not think it requires an archival mind (or
eye) or more than an average memory but it does I think demand some awareness
of product trend and availability and some knowledge of basic technical
considerations (if any). In connection with the latter, one must not forget
that we are in the territory of designs and thus what matters most is the
appearance of things; as Mr Davis reminded me, these are not petty patents.
Therefore, focus on eye appeal seems more pertinent than familiarity with the
underlying operational or manufacturing technology (if any). I feel
uncomfortable with analogy to the ‘man skilled in the art’ whose ‘nerd-like’
(and other) attributes seem too technical: Technip France SA’s Patent [2004] R.P.C. 46 at [6-12] (CA). (Emphasis originan( �span
style='mso-spacerun:yes'>
The
properly informed eye of the court must make its decision as a matter of degree
– as a matter of overall impression: see Architectural
Lighting at [52].
22
In Proctor & Gamble Co v Reckitt Benckiser (UK) Ltd [2006] EWHC
3154; [2007] FSR 13 (“Proctor &
Gamble Co v Reckitt Benckiser”) at [31] et seq, Lewison J (Chancery Division – Patents Court) considered
and approved these observations, as did the Court of Appeal: see Proctor & Gamble Company v Reckitt
Benckiser (UK) Ltd [2007] EWCACIV 936; (2007) 73 IPR 605 (“Proctor & Gamble”) at [24], [25], [32]
per Jacob LJ, with whom May and Dyson LJJ agreed. As Jacob J said (at [28])
“the informed user is alert to design issues and is better informed than the
average consumer in trade mark law”.
23
Relevantly to this case, in
January 2007, the Design Registrar of the UK Intellectual Property Office cited
and applied the Architectural Lighting
‘informed user’ analysis in ruling on the validity of a clothing design
registration: see Application by Pauline
Ann Walton to invalidate UK Registered Design in the name of Zap Ltd (UK
IPO, 0-027-07, 22 January 2007) (“Walton”).
24
In Walton, the applicant sought to invalidate a poncho design
registered by Zap Ltd (“Zap”) on the grounds that it lacked novelty, in part
because it copied her earlier poncho designs: see Walton at [3], [32]. Zap defended on the grounds that the basic
design of the poncho has long been known, and thus there was limited freedom to
design: see [15]. Applying his Honour Judge Fysh QC’s
definition of informed user, as approved by Lewison J
in Proctor & Gamble Co v Reckitt
Benckiser (Walton at [36]-[37]),
the Registrar accepted Zap’s submissions, concluding “I believe that an
informed user would be aware that there is limited freedom to design a poncho
which is not basically square or rectangular in shape”: see Walton at [40]; also at [43]. Based
primarily on a difference in neck design, the Registrar found that the Zap
design would in fact create a different overall impression on an informed user
and thus it was validly registered: see Walton
at [39]-[45].
25
In Australia, the Australian
Designs Office (“ADO”) considered the informed user standard in Re Application in the name of Apple
Computer Inc (2007) 74 IPR 164 (“Apple”) and Icon Plastics Pty
Ltd [2007] ADO 2 (5 July 2007) (“Icon”).
In Icon, the ADO cited the ALRC
Report but rejected the view that “a notional informed user is a melding of the
(probably divergent) views of those who exemplify a range of informed users. A
better approach is to say that, in dealing with this jury question, the
legislation defines a standard, such that the registrar or the court should
postulate the view of a typical member of a sample of informed users”: see Icon at [19]. The Registrar concluded
that “to apply the standard of the informed user for the purpose of s 19 would
therefore be to postulate a user that is ‘reasonably’ informed; not either
barely informed, on one hand, or fully expert on the other”: see Icon at [21]. Apple cited the ALRC Report, this time for the proposition that the
informed user standard is objective, and stated the view that an informed user
is an ordinary intended user of the
product made from the design, who is familiar with the product: see Apple at [11], [14].
26
In
summary, the standard of the informed user is an objective one. In this case,
the assessment must be that of a user
of ladies’ garments, which would include a potential purchaser, either in
retail sales (such as a buyer for a fashion store) or at the ultimate consumer
level. A designer or manufacturer of ladies’ garments is not, on account of
design or manufacturing knowledge alone, an informed user. The notional user
must be informed, in the sense that the user is familiar with ladies’ garments.
The informed user is not an expert, but must be more than barely informed. The
focus for consideration is on eye appeal and not on internal or less visible
manufacturing features.
27
There
may be a difference in the discussion to date as to what is needed to have the
requisite product familiarity. On one view, this familiarity is greater than
the information possessed by the average user; on another view, this
familiarity is that which is possessed by the ordinary user: compare Architectural Lighting at [50] with Apple at [14]. The former approach is to
be preferred. I doubt that, generally, the ordinary user will be appropriately regarded
as an informed user. In the present
context, women as a class are the ordinary users of ladies’ garments, but not
all women have the requisite degree of familiarity to be described as informed users. Thus, whilst there will
be some women who subscribe to fashion magazines (such as Vogue or Collezioni
that illustrated the prior art in this case) and have particular knowledge of,
and familiarity with, fashion trends, there will be many other women who lack
such knowledge and familiarity. Precedent and the text of s 19(4) indicate that
it is from the perspective of someone closer to the former group that the newness
and distinctiveness of the Review Design and the similarity of the Redberry garments in terms of overall impression must be
judged: compare Architectural
Lighting at [50].
28
In substance, the applicants
claim that the Redberry garment embodies a design
that is substantially similar in overall impression to the Review Design because,
when regard is had to the Review Dress, as depicted on the Register, and the Redberry garment (see PS 6 to the affidavit of Peter Strain
of 9 July 2007), the following similarities are manifest:
·
they are both
sleeveless, V-necked, cross-over or fixed wrap dresses;
·
the gathering on the shoulders
and the shoulder widths of both garments appears much the same;
·
across the upper body, both
garments are gathered at the same point on the side seam, having a similar
amount of gathering;
·
the fitted waist and waist tie
appear the same on both garments;
·
whilst the skirt on the Review Design
dress is panelled and the skirt on the Redberry dress
is not, the overall effect is much the same since both skirts fall from a
fitted waist and the skirt hem is full; and
·
both garments share much the
same proportions, since they appear to have much the same shoulder to waist and
waist to hem lengths.
29
Ms Ellis stated that, at the time she created the Review Design, she was
aware from her research that the popularity of “wrap dresses” was increasing,
but that there were problems with the traditional wrap dress, which she sought
to overcome in the Review Design. Her evidence was that she came up with a
“fixed style” wrap dress, with a number of what she described as ‘distinct’
elements, including a fixed waist, gathering at the waist side seam and
shoulders, lining, satin sash, and a knee-length skirt. In relation to the
skirt, she stated:
I designed a skirt
for the dress which was uniquely shaped to flatter the hips of the wearer. The
skirt flips out at the hem giving the garment a voluminous look. The skirt is
then fishtailed back at the thigh so that the fabric can swing with the wearer
and gives the garment a flowing effect. These features make the garment look
like it has been manufactured for a large amount of fabric like a traditional
‘wrap’ dress. These features are achieved by manufacturing the skirt section
from 6 gores which are fitted at the waist, tapered at the hip and then
fishtailed out towards the hem of the garment.
The Review Dress was made from a jersey knit fabric.
30
Although
as a designer, Ms Ellis is not appropriately
described as an informed user, her evidence assists in identifying the basis of
the applicants’ claim on infringement and, to a limited extent, the similarities
and differences between the Review Design and the design embodied in the Redberry garments – although much of these were
self-evident. Further, her evidence about points of construction and interior
similarities and differences not being part of the ‘appearance’ of the garments
are not relevant to the issues of infringement or validity.
31
Ms Ella Mudie also gave evidence, upon which Redberry relied. Ms Mudie had varied experience as a retail sales assistant for
a range of clothing and had, for a time, been employed as a fashion buyer and
design assistant. Although not in the fashion industry at the time of trial, she
was nonetheless in the nature of an informed user and was plainly a careful and
truthful witness. Further, whilst Ms Mudie said that she was not in the market for dresses of a kind
that did or might embody the Review Design since, as I understand her evidence,
they were not to her taste, she fell within the age range of the class of female
consumers to which the applicants marketed their garments.
32
Ms Mudie’s evidence was that, from her perspective,
the overall appearance of a dress was principally determined by style, cut,
fit, colour/print, and materials. After a detailed
analysis of the Review and Redberry dresses, Ms Mudie concluded:
Overall, I believe
that there are two very dramatic visual differences between the Review dress
and the Redberry dress. First, the colour and prints of the dresses are very different. I
consider that this is significant because the colour
and the pattern make an important contribution to the overall impression that
each dress creates. Second, due to their construction, the skirt sections of
the dresses appear completely different. The panels on the Review skirt create
a different type of cut, with the effect that the fabrics fall differently and
create a totally different overall impression to what the Redberry
dress does with its one panel skirt. Both of these differences are clearly
apparent when the Review design is compared with the Redberry
dress.
33
The applicants challenged the
strength of Ms Mudie’s evidence in a number of ways,
including that her affidavit was a gloss on her statement as recorded by Clayton
Utz on 16 October 2007; that her evidence was
compromised by her wrongly comparing the Redberry
garment to the Review Dress, rather than the Review Design; that this error was
compounded by her trying on the dresses; that she did not allude in her affidavit
to the sizing differences between the garments; and that her observation about
panelling was a “construction” observation. Furthermore, according to the
applicants, Ms Mudie gave undue weight to differences
in fabric pattern.
34
I
have taken account of the matters to which the applicants have directed my
attention. They are matters to be borne in mind in assessing Ms Mudie’s evidence, but I have
nonetheless been assisted by her evidence. The role of
Ms Mudie’s evidence is to assist the Court to decide
the issues of infringement and validity by reference to the standard of the
informed user. I consider her evidence instructive in this regard. The Court does
not, however, simply adopt Ms Mudie’s assessment as
its own. It must make its own objective determination, bearing in mind her
evidence, subject to the matters to which the applicants referred, and the
other evidence before the Court.
35
Considered by reference to the
standard of the informed user, in deciding whether the design embodied in the Redberry garment is substantially similar in overall
impression to the Review Design, the Court must: (1) give more weight to
similarities between the designs in question than to differences (s 19(1));
(2) have regard to the state of development of the prior art base for the Review
Design (s 19(2(a)); (3) have regard to the freedom of the designer to
innovate (s 19(2)(d)); and (4) since only part of the Redberry
design is substantially similar to the Review Design, have regard to the amount,
quality and importance of that part in the context of the design considered as
a whole (s 19(2)(c)). Further, since the design application for the Review
Design did not include a statement of newness and distinctiveness, the Court
must have regard to the appearance of the Review Design as a whole (s 19(3)).
36
Plainly enough, there are clear
similarities between the Review Design and the design embodied in the Redberry garment. The cross-over bodice and V-neck is
virtually identical. Both have a fixed waist, with a satin ribbon tie. Both
have the same high back. There are also two distinct differences. These are:
(a) The
Review Design skirt is figure-hugging to about half way to the hem, when it
expands suddenly and significantly relative to the top of the skirt, giving the
hem the ruffled look, to which both Ms Ellis and Ms Mudie
referred. This is to be contrasted with the floppy or blousy appearance of the Redberry skirt from the waist to the hem.
(b) The
pattern (including colour) of the Review Design and the Redberry
garment are different.
37
As regards the significance of
the different skirts, I prefer Ms Mudie’s evidence to
that of Ms Ellis, which, as counsel for Redberry
noted, changed over the course of the proceeding. Ms Mudie’s
evidence here was consistent with the fact that, in their internal business
records, the applicants’ specifically described the dress that embodied the
Review Design by reference to the cut of its (gored) skirt. In any event, the
difference to which Ms Mudie referred is apparent
from a comparison of the Review Design and the Redberry
garment.
38
If this were all, a finding of
infringement might be readily made, since the similarities between the designs
are to be given greater weight than the differences (s 19(1)). As noted
already, however, the inquiry under the Designs Act is more complex and
sophisticated than this.
39
Also, in deciding whether the
design embodied in the Redberry garment is
substantially similar in overall impression to the Review Design, the Court, standing
in the shoes of the informed user, must also have regard to the state of the
development of the prior art base for the design. The significance of the
similarities and differences between these designs falls to be considered in
light of the prior art.
40
There
are numerous fixed-wrap or cross-over dresses in the uncontested prior art,
including sleeveless dresses with V-necks and cross-over bodices gathered at
the side of the waist, including with waist bands or ties: see Prior Art Book,
114, 127, 137, 139, 152, 155, 175, and 179. The applicants challenged the
publication date for a Spicy Sugar Catalogue, depicting style J3182RB. Whilst
there was some confusion in Ms Dolcel’s
evidence, I accept the effect of her evidence that the Catalogue was
distributed not later than 2004; and that the garments represented in the
Catalogue were sold prior to July/August 2005. The design embodied in garment J3182RB
also depicted a figure-hugging cross-over bodice and V-neck, with a fitted
waist and black tie. It depicted a hip-hugging straight skirt, and the whole
garment was shown in a bold pattern of large white hibiscus flowers and leaves
on a black background.
41
What
differentiates the Review Design from the designs embodied in the prior art
(including the Spicy Sugar J3182RB) is the shape and configuration of the
Review Design skirt. Even so, the prior art discloses at least one skirt that is
not dissimilar in shape to the skirt of the Review Design, although the overall
impression between the design embodied in that garment and the Review Design is
different. The prior art also makes it plain that pattern (including colour) can be an important visual feature in the designs
embodied in the dresses said to exemplify the prior art.
42
Having
regard to the prior art and to the Review Design, and taking into account the
freedom of the designer to innovate, the informed user would, so it seems to
me, be aware that there is limited freedom to design a cross-over or wrap
ladies’ dress (or similar ladies’ garment) other than by reference to the shape
of the skirt (as opposed to the cross-over itself), combined with differences
in pattern (including colour). In addition, there are
significant constraints on designer innovation arising from the nature of the
product in question. Designs for ladies’ garments are invariably limited by
what women customarily wear. By and large, the “dress” has well-recognized
conventional limits.
43
Having
regard to the prior art and the freedom of the designer to innovate, what gives
the Review Design its different overall impression from the prior art
(discussed further below), from the perspective of the informed user, is the
shape and configuration of the skirt, combined with differences in pattern and
ornamentation.
44
This
conclusion has significance so far as the question of infringement is concerned,
more particularly as the Court, in the shoes of the informed user, must, if (as
here) only part of the design is substantially similar to another design, have
regard to the amount, quality and importance of that part in the context of the
design as a whole. As noted above, save for the pattern (including colour), the top (to the waist) of the design embodied in
the Redberry garment is substantially similar (front
and back) to the Review Design. Having regard to the prior art and the freedom
of the designer to innovate, this part of the Review Design is not the part
that, to the informed user, differentiates the Review Design from the prior art
in terms of creating a different overall impression. As previously mentioned, what
creates the different overall impression is the distinctive Review Design
skirt, combined with the pattern.
45
Notwithstanding
the direction in s 19(1) and the clear similarities between the Review Design
and the design embodied in the Redberry garment,
having regard to the directions in ss 19(2)(a),
(c) and (d), 19(3) and (4), the informed user would conclude that the design
embodied in the Redberry dress creates a different
overall impression to the Review Design considered as a whole, principally
because of the difference in the shape of the skirts, combined with the
differences in pattern (including colour). That is,
in this case, s 19(2)(c), considered in light of s 19(2)(a) and (d),
operates to modify the effect of s 19(1) of the Designs Act.
46
Accordingly,
the informed user would not regard the design embodied in the Redberry garment as substantially similar in overall
impression to the Review Design. The applicants’ case on infringement therefore
fails.
47
The parties differed on the
importance of colour in assessing the appearance of the Review Design as a
whole. The applicants submitted that, in considering whether or not there was
an infringement, the Court should focus on similarity in shape and overall
appearance of the garments as three-dimensional products. They submitted that
colour was of little moment in this case.
48
Redberry argued that the Court should have regard to every visual feature,
including colour, disclosed in the photographs depicting the Review Design as
registered. According to Redberry:
[T]he fact that one
dress has an orange, blue and brown cross-hatched print and the other is a
brown floral dress is a visual feature (and indeed a striking visual feature)
that must be considered …
If the Applicants did
not want colour and print to be considered they could have lodged a black and
white photograph, or a sketch.
Since
the applicants’ monopoly was defined by the colour representations they have
lodged, then, so Redberry argued, “the different
colours and prints of the dresses are parts of the design registration that are
[to be] taken into account in assessing substantial similarity”. Redberry argued that, by choosing to lodge the design
application as they did, the applicants defined their monopoly as including all
the colours of the design, the print on the fabric, and the effect of these
visual features on the appearance of the design as a whole.
49
What is protected when a design
is registered? Design registration protects the overall visual appearance of
the product (in this case, the garment) as it appears on the design register. As
Ricketson and Creswell note, “‘visual features’ are
clearly differentiated in s 7 from other features that might, in a
non-legal sense, be thought to be parts of the concept of a design”: S Ricketson and C Creswell, The Law of Intellectual
Property: Copyright, Designs & Confidential Information at [20.10].
50
The applicants placed some
emphasis on the fact that Parliament did not adopt the recommendation in ALRC
Report No 74 that “visual features” should include “colour and surface”: see ALRC
Report No 74, recommendation 8, at p 60. As the commentary to the
recommendation noted, however, the addition of “colour” to the conventional
list that included “pattern” and “ornamentation” was not strictly necessary. Whilst
“colour” is not specifically mentioned in s 7 of the Designs Act as a
distinct element of “visual feature”, colour might in some instances be
regarded as a “visual feature”, having regard to the inclusive formulation of
s 7(1) and the continued reference to pattern and ornamentation.
51
Ultimately, it seems to me that
what was said in Smith, Kline &
French Laboratories Ltd’s Design Application
[1974] RPC 253 at 261 is as true a guide as any. In this case, Graham J (as the
UK Registered Design Appeals Tribunal) said that:
… colour cannot be
ignored, though normally differences in colour are unlikely to be important. Colour
may or may not make a material difference, depending upon the circumstances and
nature of the design in question.
I
would adopt this approach in considering designs registered under the Designs
Act.
52
The fact that a design is
registered in colour through the use of colour photographs (unaccompanied by a
statement of newness and distinctiveness) is relevant to determining the extent
of the monopoly sought and given. Everything that is shown in the registered
design (unless disclaimed in some way) forms part of the subject matter
protected by registration. The pattern (including colour) that is shown on the
registered Review Design is thus part of what is protected, and is, as the
above reasoning indicates, to be accorded some weight. How much weight is to be
given to pattern and colour will depend on the nature of the product and the
relative importance of the different visual features of the registered design,
as viewed by the informed user, having regard to the prior art, and the freedom
of the designer to innovate. If colour is important, it will be so because the factors
relevant to the registered design lead to this conclusion. As indicated
already, pattern, including colour, is a feature that an informed user would
consider has some significance in creating the overall impression of the Review
Design, a conclusion borne out by the use of colour photographs to depict the
design in the registration application.
53
In the present case, an
informed user would, as Ms Mudie’s evidence and the
prior art showed, regard colour as an element in the pattern that forms part of
the overall look of the registered Review Design. The Review Design is depicted
on the register in a colour photograph of a store dummy wearing a garment in a
patterned fabric in natural tones with orange, brown and blue fine ‘fronds
leaf’ pattern, giving it, as Ms Mudie and Ms Ellis
agreed, an African or tropical look. This pattern (and the colour that is part
of it) is, however, only one element in the overall impression of the
registered design. It is, as previously observed, entirely different from the
pattern on the Redberry garment.
54
The applicants claimed that Redberry had made, imported and sold garments copied from
the Review Design. Copying is not, however, relevant to the issue of
infringement: compare Proctor &
Gamble at [4] per Jacob J. Copying from registered designs is permissible
providing the copying does not result in a product that embodies a design that
is substantially similar in overall impression to the registered design.
55
A design is a registrable
design if the design is new and distinctive when compared with the prior art
base for the design as it existed before the priority date of the design: see s
15(1). The expression “prior art base” is defined in s 15(2) and includes
designs publicly used in Australia and designs published in a document within
or outside Australia. Redberry argued that the Review
Design was not validly registered because it was not new and distinctive when
compared with the prior art base: see s 16. The Redberry
challenge was effectively to distinctiveness rather than newness: see s 16(2).
Section 16(2) calls for a determination as to whether the design said to be
registrable is distinctive, which means the design is not substantially similar
in overall impression to a design or designs forming part of the prior art. The
test of substantial similarity here again turns on the considerations set out
in s 19 of the Designs Act, to which reference has already been made.
56
Given the previous discussion
under the issue of infringement, it suffices to say that the effect of ss 15, 16(2) and 19 of the Designs Act is to frame the
following basic test for validity, namely: would an informed user (giving more
weight to similarities than differences) consider that the Review Design is
substantially similar in overall impression to a design or designs published
prior to the registration priority date?
57
As previously noted, however, the
specific application of this basic test will vary according to the factors identified
in s 19(2) of the Designs Act. For the reasons already stated, these
factors will be the prior art base (s 19(2)(a)), the amount, quality and
importance of that part of the Review Design considered as a whole that is
substantially similar to a design in the prior art base, and the freedom of the
designer to innovate. If the Court were not satisfied that the Review Design
was a registrable design at the priority date, it would revoke the registration
of the design pursuant to s 93(3)(a) of the Designs Act.
58
Redberry relied on the similarities between the Review Design and the
designs embodied in the garments that made up the prior art. The evidence
established that, for present purposes, the original cross-over wrap dress is
attributed to Diane Von Furstenberg, a celebrated American designer. An
examination of a depiction of this dress disclosed that, whilst there were some
similarities between the design embodied in the so-called Furstenberg dress and
the Review Design, there were clear differences, which meant that, from the
informed user’s perspective, the Review Design created a quite different
overall impression to the Furstenberg dress.
59
As
previously noted, having regard to the prior art to which reference has already
been made and to the Review Design, and taking into account the freedom of the
designer to innovate, the informed user would be aware that there is limited
freedom to design a cross-over or wrap dress (or similar ladies’ garment) and
that, for the most part, what gives the Review Design its different overall
impression from the prior art, from the perspective of the informed user, is
the shape and configuration of the skirt, combined with differences in pattern:
see [42]-[44] above. As already noted, there were numerous designs for V-necked fixed-wrap or cross-over dresses in the prior
art, both with and without sleeves, but none was substantially similar in overall
impression to the Review Design, when judged by reference to the informed user.
Thus, for example, the design
embodied in the Spicy Sugar garment J3182RB depicted a figure-hugging
cross-over bodice and V-neck, with a fitted waist and black tie, but it also
depicted a hip-hugging straight skirt, and a bold pattern of large white
hibiscus flowers and leaves on a black background. Having regard to the factors
to which s 19(2) and (3) direct attention, the informed user would not consider
the Review Design to be substantially similar to it in overall impression. The Review
Design might also be thought reminiscent of the design embodied in a garment
pictured in the prior art book at 152, which disclosed a cross-over bodice and
ruffled hem. Notwithstanding these similarities, differences
in the shoulder straps and the overall ‘look’ of the design, including the
skirt, combined with differences in pattern (including colour), would lead an
informed user to conclude that this design and the Review Design were also essentially
different in overall impression. This latter conclusion flows in part from an
application of s 19(2)(c), which in each instance requires the Court to
consider the amount, quality and importance of the part that is substantially
similar in the context of the design as a whole.
60
In the context of ladies’
cross-over dresses, it is very difficult to isolate one feature as new and
distinctive in and of itself. In the case of the Review Design, everything that
is shown in the registered design forms part of the subject matter protected by
registration. As previously noted, this is the look – shape, configuration, pattern
and ornamentation – of the whole of the Review Design as disclosed in a colour
photograph of the Review dress on the tailor’s dummy. It is these features in
combination, particularly the shape of the skirt and the pattern, that make the
Review Design different from the designs in the prior art and which satisfy the
criteria for registration of newness and distinctiveness. Consideration of the
prior art base, the freedom of the designer to innovate, and, in each case, the
amount, quality and importance of that part of the Review Design considered as
a whole that is substantially similar to designs in the prior art base would
lead the informed user to conclude that the Review Design as a whole was
nonetheless relevantly different in overall impression from the designs in the
prior art base. It follows from this that the Review Design is validly
registered, but that the monopoly conferred by registration is closely
confined.
61
Indeed, Redberry
acknowledged that, if differences between the Review Design and the design in
the Redberry garment as regards the shape of the
skirt and the pattern (including colour) avoided a finding of infringement,
then the likely outcome was that the Review Design was valid but not infringed.
This is the conclusion I have reached.
62
In view of the conclusion I
have reached, it is unnecessary to consider the appropriateness of injunctive
and declaratory relief. Nor is it strictly necessary to consider the question
of damages. Since the matter of damages was argued in some detail, however, I
state my conclusions as briefly as I can.
63
In Amended Particulars of Loss
and Damage, the applicants sought:
(a) damages
by reason of lost sales in the sum of $18,919.25, calculated on the assumption
that it would have sold 133 units as sold by Redberry
and would have done so at a profit of $142.25 per garment. (Counsel for the
applicants conceded, however, that the applicants had not intended to depart
from the figure of $18,679.41 mentioned in opening and in the original
Particulars: see transcript 384.)
(b) damages
for the applicants’ loss of reputation and position in the Australian market of
$200,000, by reason of:
·
Redberry’s
copying the Review Design;
·
Redberry’s
selling the Redberry garment at $59 – more than half
of the retail price at which the applicants sold the Review Dress that embodies
the Review Design; and
·
diminution of the
applicants’ reputation as an exclusive designer of original garments only
available through their retail stores and concession sites.
(c) additional
damages of $400,000 pursuant to s 75(3) of the Designs Act having regard to:
·
the flagrancy of Redberry’s conduct as constituted by the closeness of
copying and the continued denial of any knowledge of the Review Design and/or
copying; and
·
having regard to the
apparent business practice of Redberry and/or related
entities to engage in copying the garment designs of other designers which have
been the subject of previous proceedings against Redberry
for copyright infringement; the subject of copyright infringement claims; or
the subject of trademark infringement claims.
64
Damages or an account of
profits may, at the plaintiff’s option, be granted for infringement: see
s 75(1)(b) of the Designs Act. Section 75(2) to (5) further provide:
(2)
The court may refuse
to award damages, reduce the damages that would otherwise be awarded, or refuse
to make an order for an account of profits, if the defendant satisfies the
court:
(a) in the case of primary infringement:
(i) that at the
time of the infringement, the defendant was not aware that the design was
registered; and
(ii) that before that time, the defendant had
taken all reasonable steps to ascertain whether the design was registered; or
(b) in the case of secondary infringement –
that at the time of the infringement, the defendant was not aware, and could
not reasonably have been expected to be aware, that the design was registered.
(3) The court may award such additional damages
as it considers appropriate, having regard to the flagrancy of the infringement
and all other relevant matters.
(4) It is prima facie evidence that the
defendant was aware that the design was registered if the product embodying the
registered design to which the infringement proceedings relate, or the
packaging of the product, is marked so as to indicate registration of the
design.
(5) In this section:
primary
infringement means infringement of a kind mentioned in paragraph 71(1)(a).
secondary
infringement means infringement of a kind mentioned in paragraph 71(1)(b),
(c), (d) or (e).
65
I turn first to the applicants’
claim for general damages in an amount of $18,679.41. I accept that, as Redberry’s counsel submitted, on the applicants’
calculations, taking account of Mr Strain’s evidence, this figure was probably
closer to $15,000 to $16,000. As will be seen, nothing turns on this.
66
The applicants invited the
Court to calculate general damages on the assumption that every sale by Redberry of the Redberry garment should
be treated as if it had been a sale by them of the Review Dress. If the Court
were to assess damages on the simple assumption that the applicants asked it to
make, then the ultimate figure would need to be discounted to reflect the
likelihood that the applicants would have made the additional sales had the Redberry garments not entered the market. I would accept
that, as Redberry posited, the likelihood of a
consumer who bought the Redberry garment buying the
Review Dress instead (if available) was very low, probably less than 10% of the
allegedly infringing sales. Furthermore, any assessment of damages would also
need to take account of the fact that Redberry’s
wholesale sales were not in direct competition with the applicants’ retail
sales.
67
As it is, I reject the submission the
applicants have made in this regard. First, on the evidence as it stands, I am
not satisfied that the assumption that every sale by Redberry
of the Redberry garment should be treated as if it
had been a sale by Review is warranted. The evidence shows that the garments
were available for purchase by the ultimate consumer at $59 in the case of the Redberry garment and at $169.95 in the case of the Review
Dress and, in the latter case, only from Review stores or concessions.
68
There is, however, a more fundamental
difficulty with the applicants’ claim. There is no evidence of lost sales. There
is evidence of Review 2’s sales of the Review Dress in August 2005 but, whilst
there is evidence of repeats of the garment being made and presumably sold,
there is no evidence that the Review Dress was on sale a year later, when Redberry imported the Redberry
garments from China. There is, therefore, simply no evidence that the applicants’
sales were in any way adversely affected by the availability of the Redberry garments. The assumption that the applicants
invite the Court to make cannot overcome the more fundamental difficulty that
there is no evidence that, at the relevant time, the Review Dress was available
for retail sale to consumers. The applicants therefore fail to establish any
lost opportunity for sale.
69
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.
75
Counsel for the applicants
argued that, when Redberry called Mr Liu, it called
the wrong witness, and that it should have called the buyer, Mr Ke. In relation to the absence of Mr Ke,
he relied on the rule in Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”). The applicants’ counsel
argued that the inference as to Redberry’s status as
a manufacturer might, in the absence of testimony from Mr Ke,
be more comfortably drawn against Redberry. I reject
this submission. The evidence was that Mr Ke had not
bought the garments in question. This being so, it might fairly be thought
unnecessary and even inappropriate to call him. In this circumstance, the
absence of testimony from Mr Ke does not justify an
application of the rule in Jones v Dunkel.
76
In this context too, counsel
for the applicants relied on the similarity between the Redberry
garment and the Review Design, as supportive of the fact that the manufacturer
of the Redberry garments had copied the Review Design.
This would not, however, provide any evidence that Redberry
(as opposed to someone else) made the garments in question. Counsel for the
applicants also sought to rely on evidence that the applicants and other
persons had alleged on other occasions that Redberry
had copied garments and thereby infringed copyright and trade mark. For the
reasons explained below, however, I would not regard this evidence as
admissible.
77
As noted above, however, if Redberry’s buyer commissioned the making of the garments,
the buyer did so in China, where the garments were manufactured. Section
21(1)(b) of the Acts Interpretation Act
1901 (Cth) provides that, in any Act, unless the
contrary intention appears, “references to localities jurisdictions and other
matters and things shall be construed as references to such localities
jurisdictions and other matters and things in and of the Commonwealth”. This provision reflects the common law presumption
that statutes are read “as being prima
facie restricted in their operation within territorial limits”: see Jumbunna Coal Mine NL v Victorian Coal
Miners’ Association (1908) 6 CLR 309 at 363 per O’Connor J, discussed in DC
Pearce and RS Geddes, Statutory
Interpretation in Australia (6th ed,
2006) at [5.5]. The effect of s 21(1)(b) of the Acts Interpretation Act 1901 (Cth) is
implicitly acknowledged in s 4 of the Designs Act. Section 21(1)(b) of this Act
operates to confine the making or offering to make, with which s 71(1)(a)
of the Designs Act is concerned, to a making or an offering to make in
Australia (as s 4 of the Designs Act reflects): compare Hella-Australia Pty Ltd v Quinton Hazell (Aust)
Pty Ltd (1967) 10 FLR 86 (“Hella-Australia”),
which Gummow J cited with approval in Carnival Cruise Lines Inc
v Sitmar Cruises Ltd (1994) 120 ALR 495 (“Carnival Cruise”) at 509. In Hella-Australia, Street J refused an
interlocutory injunction on the basis that an article did not infringe a registered
design under s 30(b) of the Designs Act
1906 (Cth) unless the design had been applied to
the article in Australia. Following Hella-Australia, Parliament
amended s 30, with the result that the importation and sale of articles to
which the design had been applied outside Australia were also infringements: see
Designs Amendment Act 1967 (Cth) (“the 1967 Amendment”) and Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221 CLR
287 at 293. Although Hella-Australia concerned a provision in the
former Act, nonetheless it and the authorities referred to in Carnival Cruise and Carnival Cruise itself, establish that, absent contrary statutory
intent, infringements must occur within Australia. Accordingly, on the
evidence, Redberry’s liability could not arise under s
71(1)(a) but only under s 71(1)(b), (c), (d) or (e).
78
In written submissions filed at
the Court’s request, the applicants argued that s 71(1) of the Designs Act
should be construed to have the same effect as under the 1967 Amendment. The
text of s 30 as it stood after the 1967 Amendment is significantly different
from the text of s 71(1) of the Designs Act. Furthermore, the expression “such
a product” in pars 71(1)(b)-(e) of the Designs Act refers to “a product, in
relation to which the design is registered, which embodies a design that is
identical to, or substantially similar in overall impression to, the registered
design” and does not pick up the territorial limitation in par 71(1)(a), which
only applies to making or offering to make. Accordingly, the difficulty that
the 1967 Amendment sought to overcome with respect to s 30 of the former Act
does not arise with respect to s 71(1) of the current Designs Act.
79
On the evidence before the
Court, at the time of the infringement, Redberry was
not aware, and could not reasonably have been expected to have been aware, that
the Review Design was registered. Redberry thus
satisfied s 75(2)(b), with the result that the Court had the discretion that s
75(2) conferred upon it, to refuse to award damages or to reduce the damages
that would otherwise have been awarded. Mr Liu’s evidence was that, at the time
the Redberry garments were imported in July 2006, he
was unaware that design registration was possible for garments such as dresses
and that he did not become aware of the registered Review Design until December
2006, when he received a letter from the applicants’ solicitors. I accept his
evidence in this regard. Further, in the course of the hearing, the parties
stated that they were agreed that:
The representations of
registered design No 307708 were first placed on the AU Designs Data Searching
facility at about 3.00 AM on 6 July 2006 and that the public could only view
those representations from that time.
The
importation of the Redberry garments was around 13 July
2006. Counsel for the applicants conceded that it could not be said that within
this time the register could reasonably have been searched and understood.
80
Further, I reject the
applicants’ submission that a swing tag on the Review Dresses provided a form
of notice to Redberry in July 2006 that the Review
Dresses might be subject to a registered design. First, the evidence leaves me
in some doubt as to whether the Review Dress carried a swing tag claiming
design registration when it was sold in August 2005. Mr Strain’s evidence in
cross-examination was that the applicants’ garments carried swing tags from around
May/June 2005 until around December 2007. According to this evidence, these
swing tags noted that “Review Styles are Registered Designs”. If Mr Strain’s
evidence were accepted as reliable, then the Review Dresses sold in August 2005
carried swing tags notifying registration. There are, however, difficulties in
accepting Mr Strain’s evidence as reliable. He was not specifically asked about
the Review Dress and hence gave no specific evidence about the Dress. Also in
cross-examination, counsel failed to draw Mr Strain’s attention to the
likelihood that there were other versions of the swing tag being used by Review
in 2005, with different wording. Ms Ellis’s evidence was even less persuasive. Ms
Ellis said in her affidavit that, when it was sold, the Review Dress carried a
swing tag notifying that it embodied a registered design. Ms Ellis conceded in
cross-examination, however, that she could not in fact recall whether the
Review Dress had in fact carried a swing tag of this kind. Her evidence in
re-examination made it clear that the matter of swing tags was not within her
field of responsibility and knowledge. She identified another person within the
applicants’ organization who would have had the relevant knowledge of and
responsibility for swing tags but this person did not give evidence. In these
circumstances, I am unpersuaded that the evidence establishes, on the balance
of probabilities, the Review Dress was sold with a swing tag notifying
registration.
81
Further, on the evidence of Mr
Strain and Ms Ellis, Review 2 was claiming design protection for the Review
Design well before it was entitled to do so and before a search of the design
register would have disclosed registration of the Review Design. I doubt that
notice prior to registration is effective to attract the benefit of s 75(4)
of the Designs Act. That is, s 75(4) can operate to make a swing tag marked to
indicate design registration prima facie evidence that the defendant was aware
of the design registration only when the design has in fact been registered. It
follows that the swing tag could not fix Redberry
with prima facie awareness that the Review Design was registered prior to
registration on 5 July 2006 (notwithstanding that the design had a priority
date of 11 August 2005). Moreover, as noted below, there was no evidence that
the Review Dress embodying the Review Design was on sale as at July 2006, when
the swing tag notification would have attracted s 75(4).
82
In all the circumstances of the
case, had I reached a contrary conclusion on infringement, I would have reduced
the damages that would otherwise have been awarded to a lesser sum than $3,500
– the defendant having established that at the time of the infringement (making
an assumption contrary to the finding above) that it was unaware, and could not
reasonably have been expected to be aware that the design was registered.
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.
86
Further, the applicants’ allegations
as to other infringements (whether or not the subject of previous settlements) remain
simply that; none has been established. It is unnecessary to determine whether
the terms of the release precluded the applicants’ reliance on the claims the
subject of the settlements.
87
The applicants sought to create
a picture of interrelated corporate copyists. Whilst some of the companies to
which reference was made had previously been related in a corporate sense, none
was so related at the time of the alleged infringement, although individual
officer holders or employees were related through family ties or marriage. None
of this evidence assists with regard to any fact in issue, because even if
interrelated business ventures were assumed (and there was no real evidence of
this), the evidence rises no higher than showing a propensity to copy. As
stated already, in a designs context, this is not conduct that of itself offends
design rights.
88
The nature of the fashion
industry and its products as disclosed in the evidence can also be borne in
mind. The evidence indicates that copying and adapting the designs of other
designers is the accepted modus operandi of designers, including reputable
designers, within the industry; and that it is through this process that
fashion products are created. Whilst evidence of repeated design infringements
might well be a relevant consideration on the question of additional damages,
evidence of mere copying is not. The applicants did not make out a case for
additional damages.
89 In summary, for the reasons stated, I would dismiss the applicants’ infringement claim and the respondent’s cross-claim for invalidity. The parties shall be given an opportunity to make submissions on costs.