The Federal Court of Australia recently handed down its decision in Gram Engineering Pty Ltd v Bluescope Steel Ltd [2013] FCA 508. This case is of particular interest because the design in question was registered under the Designs Act 1906, and thus the relevant issues were determined under the old law. This case is also a reminder of the considerable number of old Act design registrations remaining on the Register, despite the commencement of the new Act1 in 2004.
Background
Gram Engineering Pty Ltd (Gram) has been manufacturing and selling steel fencing panel sheets in Australia for many years. Gram sells its fencing panel sheets in direct competition with the respondent, Bluescope Steel Limited (Bluescope). Bluescope was formerly a division of BHP Biliton Limited.
Around 1993, Gram developed a fencing panel sheet that could be used to build a fence that looked good from both sides. The fencing sheet was designed primarily for backyard home fences. Gram filed four design applications directed to different fencing panel sheets. One of the designs was registered as registration AU 121344S (Gram's design), and the design representations depicted a fencing panel sheet with a sawtooth or zig-zag profile. Fencing sheets with this profile were sold by Gram in Australia from September 1995, and by 2002 Gram's sawtooth profile sheet held approximately 35-40% of the Australian market for fencing panel sheets.
In mid 2002, Bluescope launched a fencing panel sheet under the brand name 'Smartascreen'. The Bluescope product had a zig-zag or sawtooth profile with six pans per sheet. Gram's design also included six pans per sheet and there was considerable similarity between the two products.
In 2011, Gram commenced design infringement proceedings against Bluescope claiming that the Bluescope product was a "fraudulent" or "obvious imitation" of registration AU 121344S. By this time, Gram's registration AU 121344S had expired having reached its maximum 16 year term on 8 February 2010.
Bluescope denied infringement and counter claimed that AU 121344S was invalid as Gram's design was not new or original on the priority date as required under section 17(1)(a) and section 17(1)(b) of the Designs Act 1906 (the old Act).
Validity
Section 17(1)(a) of the old Act states that a design for an article shall not be registered unless it is a new or original design. It further states that a design should not be registered where the design differs in immaterial details or in features commonly used in the relevant trade in respect of the 'same article'. When claiming invalidity of Gram's design, Bluescope relied on a number of prior art documents most of which were for roof sheets or cladding sheets. Although one of the prior art documents (Design 23) identified that the product could be used as a fencing sheet, in his judgement, Jacobson J stated that "Design 23 does not amount to a publication in respect of an article of fencing panel sheet". Accordingly, Jacobson J found that the prior art was not for the "same article" as Gram's design. Further, Jacobson J was not satisfied that Gram's design only differed from the prior art in immaterial details or features commonly used in the trade.
Sections 17(1)(b) of the old Act is concerned with designs which are an "obvious adaptation" of an earlier design. Jacobson J was not satisfied that Gram's design was an obvious adaptation despite the prior art. He commented that the "distinctive shape or configuration of Gram's sawtooth profile provides a complete answer to the claim that it was an obvious adaptation".
Infringement
Section 30(1) of the old Act establishes that a registered design is deemed to have been infringed, when the design itself is applied to an article for which the design has been registered, an obvious imitation of the design is applied to that article or a fraudulent imitation of the design is applied to that article.
In Dart v Décor2, it was explained that an "obvious imitation is one which is not the same as the registered design but is a "copy apparent to the eye notwithstanding slight differences"3. The question must be looked at as one of substance and by examining the essential features of the design".
Jacobson J considered the expert evidence presented during trial and noted the important features of the design as identified by each of the experts. He then determined that the Bluescope product was an obvious imitation of Gram's design.
Jacobson J then went on to consider whether the Bluescope product was a "fraudulent imitation" of Gram's design. Importantly, Jacobson J writes that "fraudulent imitation", under section 30(1) of the Act, requires proof that the infringing design was deliberately based or derived from the registered design. It does not require proof of dishonesty but is closer to, though not entirely analogous with, equitable fraud: (Polyaire v K-Aire at [21], [35])4.
Jacobson J was troubled by Gram's delay in bringing the proceedings. He considered that it affected the memory of essential witnesses called by Bluescope, and worse still, prevented an important witness from being able to give evidence due to age and ill health. It therefore fell on him to make inferences that he would not have had to make had all the key witnesses provided evidence.
After consideration of the evidence before him, Jacobson J reluctantly determined that there was a plausible explanation for the similarity between the Bluescope product and the Gram design. Jacobson J accepted that Bluescope prepared drawings of their proposed new product with a view to making "a Gram look alike" product. However, he did not accept that drawings of the Bluescope product were made without knowledge of the Gram design.
To Gram's detriment, without testimony from a key witness and noting uncertain recollections of at least one witness due to the passage of time, Jacobson J was unable to satisfy himself that someone at Bluescope actually deliberately copied Gram's design. Further, he was not prepared to make the inference that the Bluescope product "was deliberately based or derived from the registered design", and thus did not find fraudulent imitation of Gram's design.
Summary
This case is an important reminder of the different requirements for both validity and infringement under the old and new Design Acts. This case also serves as a warning about the potential risks associated with delaying the initiation of court proceedings.
References
1Designs Act 2003
2Dart Industries Inc v Décor Corporation Pty
Ltd (1989) 15 IPR 403
3Malleys Ltd v JW Tomlin Pty Ltd (1961) 180
CLR 120
4Polyaire Pty Ltd v K-Aire Pty Ltd (2005) 221
CLR 287
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