Australia: Significant damages award for Ladakh in copyright infringement case

Last Updated: 1 December 2010
Article by Anthony B. Watson and Jonathan Feder

The Facts

An employee of Ladakh created an original graphic design of a human rib cage (Graphic) which was printed onto a tank top ( Skeletor Tank).

A number of months after Ladakh released the Skeletor Tank into the marketplace, a representative of Ladakh bought a "Boho Australia" branded garment that featured a copy of the Graphic ( Boho Garment). The Boho Garment retailed for A$33 which is significantly lower than the recommended retail price for the Skeletor Tank which was A$44.95.

Ladakh issued copyright infringement proceedings in the Federal Magistrates Court against Jing Cao and Jianfeng Li being the persons carrying on the "Boho Australia" business.

The findings

At trial, the respondents accepted that the print on the Boho Garment was identical to the Graphic. However, the respondents claimed that they purchased the Boho Garment from a manufacturer in China and they were not involved in the copying of the Graphic nor did they authorise this conduct. The question which needed to be answered by the Court was whether the respondents reproduced or authorised the reproduction of the Graphic in breach of Ladakh's copyright rights.

Ladakh had no direct proof the respondents sent the Skeletor Tank or the Graphic to their manufacturer in China to copy. However, it was accepted by all of the parties in the proceeding that the only probable explanation as to how the Boho Garment featured a print identical to the Graphic was that somebody in Australia sent the Skeletor Tank or the Graphic to a person to copy the print in China. Based on the facts in the case, the Court found that the respondents must have sent either a sample of the Skeletor Tank or a photograph of the Graphic to their manufacturer in China to copy the Graphic. The Court came to this conclusion as the evidence showed that the only persons found to have been selling a garment which featured a print identical to the Graphic were the respondents. Also, if the Court was to accept the respondents' account of events that they simply purchased the Boho Garment from a manufacturer in China without instructing them to copy the Graphic then there must have been an extraordinary series of coincidences. Given the fact the Boho Garment featured a print that was an exact copy of the Graphic the Court concluded that it defied belief that this occurred without direct copying by the respondents.

Liability as a partner

There was no proof that the second respondent was directly involved in the selection of garments sold by the "Boho Australia" business. The evidence showed that the selection of garments was the role of the first respondent. Nonetheless, the second respondent was found to be equally responsible for the conduct of the fist respondent on the basis that they ran the "Boho Australia" business in partnership. The Court ruled that the respondents were carrying on a business in common with a view for profit within the meaning of the Partnership Act (NSW) 1892.

Damages for lost sales

Ladakh sought compensatory damages for lost sales. In assessing Ladakh's claim for damages for lost sales the Court was particularly influenced by the fact that Ladakh's target market was different to that of the respondents, both in the price charged for its goods and the targeted age bracket. The Court also found that Ladakh's goods were sold in different shops to those who stocked the "Boho Australia" garments. For these reasons the Court estimated Ladakh's damage as the loss of sales on approximately 30 garments, despite 123 infringing garments being sold by the respondents. The Court awarded Ladakh A$350 in damages for lost sales.

Damages - damage to reputation

The Court found that Ladakh had created a brand in its name and accepted that it has built up a substantial reputation in Australia. The Court ruled that the presence of the Boho Garment would have had some diminishing effect upon the reputation of the Graphic which would equally diminish the exclusivity of Ladakh's design and its reputation generally. In awarding a sum for damages to reputation, the Court also took into account the fact that the Boho Garment was sold for a lesser amount and in stores more down-market to the ones who sold the Skeletor Tank. The Court found that this damaged Ladakh's exclusivity. The Court awarded Ladakh A$10,000 for damage to its reputation.

Damages - additional damages

The Court ruled that the infringement was flagrant. The Court reached this conclusion on the basis that the first respondent lied about her involvement in the act of infringement and also based on the finding that the first respondent "set out on a course of action designed to achieve a commercial advantage in circumstances where she well knew, on her own evidence, that such action might be unlawful".

In making an assessment for additional damages, the Court took into account the small profit made by the respondents, the steps taken by the respondents to stop any further sales from taking place once they received Ladakh's letter of demand, the recall which the respondents put into action to recall the Boho Garments from sale once they received the letter of demand and the respondents' endeavours to conceal their conduct, including when giving evidence in court. In determining the amount of additional damages awarded, the Court considered that it is "equally important to deter similar infringements of copyright...[s]uch breaches should be discouraged". The Court awarded Ladakh A$30,000 in additional damages.

The lesson

Fashion designers who are victims of having their copyright works reproduced without their consent can successfully bring copyright infringement actions. The Courts have become more willing to award significant damages awards for damages to reputation as they understand the damage that copy products in the marketplace can have on the reputation of a brand. In addition, the Courts are also willing to award significant amounts in additional damages in order to deter similar infringements by others in the marketplace who may be tempted to copy other designer's designs. The Court may also award additional damages if respondents give misleading evidence to the Court in an attempt to evade a finding of copyright infringement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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