A first in Australian intellectual property law occurred without much fanfare on 12 March 2021. On that day, His Honour Justice Greenwood handed down the decision in Key Logic Pty Ltd v Sun-Wizard Holding Pty Ltd [2021] FCA 208 (the "Decision"), a matter which had been heard over three days of trial from 21 May 2019 to 23 May 2019.
The first in Australian intellectual property law is that, as far as this author is aware, this was the first appeal to the Federal Court from a decision of a delegate of the Registrar of Designs that had gone on to be the subject of judicial determination. As such, the case is important primarily for setting out principles as to which party bears the onus of proof in such a proceeding. However, the case is also useful for:
- Confirming and reinforcing existing principles as to how matters such as "newness and distinctiveness" and "substantially similar in overall impression to another design" are to be looked at and assessed;
- The application of principles of obligations of confidentiality in respect of the disclosure of a design in a commercial context.
Background - Revoking the Registration of a Design
The Decision concerned an appeal under s. 68(6) of the Designs Act 2003 (Cth) (the "Act") from a decision of the delegate of the Registrar of Designs revoking the registration of a design in respect of a product called a "solar bollard"; Design No. 201012310, Registration AU332890 S (the "Design"). A solar bollard may be briefly described as a post with a solar-powered light source affixed on top. In this case, the subject matter of the Design was basically the visual features of the light source, being made up of the shape of the outer casing and visible internal features, such as a component described in the Decision as a "conical diffuser". An image of the Design (being the GEN II product) on the left side-by-side with the previous model (the GEN I model) is as follows:
On 7 June 2010, an application for registration of the Design was filed under the Act. The applicant was Exlites Pty Ltd. At that time both Mr Arieni (subsequently to be the sole director of Key Logic) and Mr Fry (subsequently to be a director of Sun-Wizard - sole director from 10 June 2018) were directors of Exiles. The Design was registered in the name of Exlites on 24 September 2010. Mr Arieni was the person who created the Design - is the "designer" for the purposes of s. 13 of the Act. The Design was certified on 13 January 2012.
Mr Fry ceased to be a director of Exlites on 22 March 2013. It would perhaps not be inaccurate to say that Mr Arieni and Mr Fry had a falling out. For more on that, see the decision of His Honour Derrington J in Key Logic Pty Ltd & Anor v Blue Groper Investments Pty Ltd & Ors (2019) 367 ALR 507. Shortly after Mr Fry's resignation as a director of Exlites, resolutions were passed in deeds of assignment entered into whereby, as at 27 March 2013 the ownership of the registered Design was transferred from Exlites to Key Wholesalers Pty Ltd and then, subsequently, to Key Logic on 14 July 2014. Those assignments were found by Derrington J in the Key Logic v Blue Groper case to the bona fides and legitimate.
Mr Arieni subsequently conducted his business of developing, manufacturing and supplying solar lighting products by means of Key Wholesalers and Key Logic. Shortly after his resignation from Exlites, Mr Fry endeavoured to establish - via companies such as Karmic Lighting Pty Ltd (a respondent in the Key Logic v Blue Groper proceeding) and Sun-Wizard - a business in competition with the Key Logic business.
On 16 February 2015, Sun-Wizard made a request under s. 63 of the Act that the Registrar of Designs "examine the design". The request for examination called into question the "newness and distinctiveness" of the Design. The contention was made that the Design was neither new nor distinctive due to its similarity to the GEN I model solar bollard and/or that there had been a publication of the design not in circumstances of confidence prior to the filing date of the application for the registration of the Design. That is, it was asserted by Sun-Wizard that the sending of certain emails by Mr Arieni on 21 April 2010 and 3 May 2010 (the "Emails") to members of the so-called certified installer network ("CI Network") had the effect of publishing openly the Design prior to the priority date. As such, the Design formed part of the prior art base before the priority date and was, therefore, neither new nor distinctive at that date. The key issue, therefore, in all of this was whether the communications by the Emails were in circumstances of confidence or not.
Unfortunately for Key Logic, the delegate of the Registrar of Designs found that the Emails had been communicated (published) to members of the Exlites CI Network not in circumstances where the recipients were under an obligation of confidence concerning the communications. As such, the delegate found that the registration of the Design should be revoked. The delegate's decision in that regard was published on 17 October 2017.1
The Appeal to the Federal Court - Matters of Importance
On 6 November 2017, Key Logic filed an appeal in the Federal Court against the delegate's decision. The filing of the appeal (the Notice of Appeal) at the effect of staying the revocation of the design until such time as the appeal was withdrawn or was unsuccessful. Happily for Key Logic, the outcome of the appeal was that the delegate a posse's decision to revoke the registration of the Design was overturned. From the Decision handed down on 12 March 2021 the following matters are notable:
1. It was confirmed that the nature of an appeal from a decision of the Registrar of Designs is that of a hearing de novo - it is not an appeal in the usual sense. That is, the question for the court "to decide for itself de novo is the same question the Registrar's delegate was called on to decide" based on all of the evidence adduced in the Federal Court proceeding.2
2. This was the first proceeding to come before the Court in the way of an appeal under s. 68(6) of the Act - that is, an appeal against a decision of the Registrar to revoke the registration of design. As such, there were no direct authorities that addressed the question of which party bears the onus of proof in such a proceeding.3 It was determined that, as the question the Court is called upon to decide de novo is the same question the Registrar's delegate was called upon to decide on the basis of the contentions of the party that had called for the examination of the design (in this case, Sun-Wizard), Sun-Wizard continued to bear the onus of demonstrating on the balance of probabilities that the Design is not a registrable design. The Court made this determination based on the text of the provisions of the Act itself - His Honour found it unnecessary to examine authorities that addressed somewhat similar appeal provisions in the Trade Marks Act 1995 (Cth) or the Patents Act 1990 (Cth) that might be thought to provide analogical guidance. In short, it was determined that Sun-Wizard, being the true moving party agitating for revocation, bore the onus of proof of demonstration that the Design is not a registrable design. However, in respect of whether the Emails sent by Mr Arieni were not published by reason that the Emails were received by recipients in circumstances that gave rise to an obligation of confidence, Key Logic bore the onus of proof. Again, that is because Key Logic was the "moving party" in respect of that contention.4
3. The decision endorsed the principles espoused in earlier cases as to the factors referred to in s. 19 of the Act to be taken into account when assessing whether a design is substantially similar in overall impression to a design forming part of the prior art base. As such, the approach taken in such cases as Review 2 Pty Ltd (in liq.) v Redberry Enterprise Pty Ltd (2008) 173 FCR 450 and LED Technologies Pty Ltd v Roadvision Pty Ltd (2012) 199 FCR 204 was endorsed.5
4. As to the issue of whether the Emails were received by the recipients in circumstances giving rise to an obligation of confidence, His Honour found it determinative that the Emails were sent in circumstances where:
(a) The Emails were sent to a limited group of recipients (termed a "cohort") who formed the CI Network for Exlites, membership of which afforded certain advantages, including financial advantages;
(b) The information conveyed by the Emails (at least in respect of the design of the new product) was inherently confidential being a product still under development and which was ultimately intended to be commercialised;
(c) The Emails and the information contained therein were provided to the members of the CI Network solely in their capacity as members of that network and solely for the purposes of that network as the information went to features of a product still under development and was put to the members in order to obtain their opinions about the product.
As such, His Honour found that the members of the CI Network fell under an obligation of confidence to maintain the confidentiality of the information contained in the Emails until the product was in its final form and in a position to be promoted to the public at large. In making this finding His Honour explicitly stated that his analysis was "entirely consistent with the principles reflected in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd and Others (1948) 65 RPC 203, Lord Greene (the Master of the Rolls) at 215; Coco v AN Clark (Engineers) Ltd [1969] 86 RPC 41, Megarry J at 47-50; Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37, Gowans J at 40; Australian Medic-Care Co Ltd (a company incorporated in Hong Kong) v Hamilton Pharmaceutical Pty Ltd (2009) 261 ALR 501, Finn J at [261]-[637], but particularly [631]-[634]; and RLA Polymers Pty Ltd v Nexus Adhesives Pty Ltd and Others (2011) 280 ALR 125, Ryan J at [42]".6
Interestingly, a rather "pro forma" and generic confidentiality footer to the Emails - see para. [282] of the Decision for the wording - was not regarded as being in any way determinative of the character of the information contained in the Emails or of the circumstances in which the Emails were sent or received. Rather, His Honour regarded that footer as merely being "a cognitive cue of some importance to members of the cohort".7 suffice it to say, such a footer would not likely, by itself, be sufficient to impart an obligation of confidence on an intended recipient to an email.
Result
Key Logic was entirely successful in its appeal and the decision of the delegate of the Registrar of Designs was set aside. His Honour found that the Design (being the design of the GEN II model) was "new and distinctive" when compared to the prior art base which, in this case, was represented by the earlier GEN I product produced by Exlites. Further, the Emails having been received by the CI Network recipients in circumstances imposing an obligation of confidence, there had been no publication of the Design before the priority date such that the information conveyed in the Emails did not form part of the prior art base. Most simply, there had been no disclosure or publication of the Design prior to the priority date.
Addenda
* Bennett & Philp Lawyers acted for Key Logic in the Federal Court proceedings, with Mr Ben Fitzpatrick of Counsel.
** Insightful readers may have already noted that, given that the priority date in respect of the Design was 7 June 2010 and that design registration protection ceases after a maximum of 10 years, the registration of the Design actually ceased (expired) on 7 June 2020. As such, the Decision was handed down after the registration of the Design had expired.
Footnotes
1 Sun-Wizard Holding Pty Ltd v Key Logic Pty Ltd [2017] ADO 8 (17 October 2017).
2 Paras. [5] and [6] of the Decision.
3 Para. [33] of the Decision.
4 Paras. [33] to [42] of the Decision.
5 Paras. [21] to [23] of the Decision.
6 Para. [284(18)] of the Decision.
7 Para. [284(16)] of the Decision.
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