So you have a great product design. However, your New Zealand distributor has just rung to tell you that your biggest competitor has brought out a new product, virtually identical to yours. They haven't used your brand, the packaging is different, but the product itself is difficult to tell apart from yours. You haven't filed design registrations in New Zealand - it wasn't worth the cost - so is there anything you can do to stop this? Perhaps more than you might think.
Copyright in New Zealand protects product design
New Zealand copyright law provides much wider protection to product designs than many other countries, including Australia. The underlying design drawings, provided they are original, are artistic works protected by copyright. The New Zealand Copyright Act 1994 specifically states that indirect copying infringes copyright, as does copying of a 2D item in 3D. That means that making a 3D copy of a product infringes the copyright in the design drawing. The major limitation in New Zealand law is that protection against the creation of 3D copies lasts for 16 years from the time that the product is first "industrially applied". In most cases this will be when it is first put in production, and for a large number of products this will provide protection over the likely lifespan of the product.
For businesses concerned about copying of their product design this is good news. Copyright automatically comes into existence on the creation of the design drawings. No need for registration, no costs up front.
The protection offered to product designs by copyright is not however without limitation. Often elements of product design may be dictated by the function of the product and/or be commonplace in the industry. This may impact in various ways on a copyright case. In general terms, the greater the extent to which the design encompasses functional or common elements, the more difficult it may be to establish infringement. If there is no originality in the product design, there may be no copyright at all. Even if the design is sufficiently original to qualify for copyright protection, copying of functional or standard elements may not be considered to be taking of a substantial part of the labour and skill of the copyright owner, which may lead to a conclusion that copyright has not been infringed.
Avoiding the legal pitfalls
From a practical point of view, there some things you can do to put your organisation in the best position possible, should it become necessary to enforce copyright.
In such a scenario, it is important to be able to identify the relevant copyright work. Remember that this is not the product itself, it is the drawing or prototype on which the product is based. Record keeping comes to the fore in this respect. There is far less room for error (an error which can be fatal in a copyright case), if clear records have been kept of the product development, from the original sketches or drawings, through new iterations, to the end product.
It's also key to be able to establish that you hold the requisite rights in the copyright. This is particularly important where independent designers or engineers may have been involved in the product design. Under New Zealand law, in most cases a person commissioning and paying for a work such a drawing to be created will be the owner of copyright but this is not without doubt. In one case, the parties spent a considerable amount of time arguing in Court about whether a design had been paid for, in the case of a "free design service", where payment was subsequently made for more detailed design drawings and tooling. Such situations can be avoided by ensuring that copyright ownership is vested in your organisation by way of clear contractual terms.
Steering clear of infringement
The copyright position in New Zealand can also clearly raise issues for the launch of new product designs and the potential for such designs to infringe existing copyright, and should therefore be taken into account in terms of freedom to operate. Unlike in some other countries, copying of a product design not protected by a registered design may not be permissible, if it infringes copyright. The main point to remember in that regard is that copyright is only infringed by copying. Even an identical design will not infringe if it is independently derived. However a Court is entitled to draw conclusions as to copying from surrounding circumstances, even if there is no direct evidence of copying. Evidence of an independent design path is the best protection in such a case. As with copyright owners, it can be crucial that good records of the design process are kept, to satisfy a Court that no copying took place.
It is also important to note that starting with an existing competing product and making changes to it is a risky strategy. There is no clear standard as to how much change is required before copyright is not infringed. It will depend in each case on both a quantitative and qualitative assessment of how much of the labour and skill of the copyright owner has been taken. In any case, starting from the position that a design is based on an existing product, will tend to immediately put you on the back foot if the copyright owner takes action.
Importance of design registrations
What of design registrations in New Zealand? Although copyright provides a very useful alternative avenue of protection, it is not without its drawbacks. Design registrations are still therefore very worthwhile, and can be used in combination with a copyright claim. In particular, there is no need to independently establish what the protected design is (unlike the requirement to establish a copyright work) and importantly, copying need not be shown. A product design substantially similar to a registered design will infringe, even if it was independently created. A combination of registered design protection and copyright is therefore ideal.
To summarise, the key practical steps you can take to maximise protection of your product design, and avoid infringement of anyone else's design are:
- Always keep good records of the design process so that it can be identified at a later stage who came up with what and when, and how iterations of the process led to the final product. This may include keeping dated CAD drawings, handmade drawings and a record of the people involved in the design process, and in what capacity.
- Where outside agencies are used in the design process, ensure that copyright ownership is dealt with in a written document. Employee contracts should also deal with the creation of intellectual property.
- Be aware of your competitors' product designs, both to ensure they don't infringe your copyright and to consider any potential infringement issues on your side.
- An independent design path is very important, particularly when intending to bring a new version of a product into the market to compete with an existing market leader. Starting with the existing product and attempting to 'design around it' by making changes is risky. In some cases you may need to consider sending a technical specification to a designer who is unaware of the existing product in question, to establish that independent design path.
- When launching a new product design, a freedom to operate assessment is desirable, including a registered design search and an assessment of any potential copyright issues.
Shelston IP Lawyers has an office in Auckland and can assist with all copyright issues and disputes. We also provide freedom to operate assessments covering all forms of intellectual property including copyright and registered designs.
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.