Chris Ford Enterprises Pty Ltd v BH & JR Badenhop Pty Ltd

[1985] FCA 178

Re: CHRIS FORD ENTERPRISES PTY. LTD. and S.T. SOLAR PTY. LTD.
And: B.H. & J.R. BADENHOP PTY. LTD. and M.W.S. EXTRUSIONS (AUSTRALIA) PTY.
LTD.
VG No. 317 of 1984
Design Act 1906, s.19 - Copyright - Trade Practices
(1985) ATPR para 40 - 568 / (1985) AIPC para 90 - 214 / 7 FCR 75

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Smithers J.(1)

CATCHWORDS

Design Act 1906, s.19 - Author of design operating pursuant to agreement for valuable consideration - Limitation in s.22B(1A) upon amendment of application for registration pursuant to s.22B - misleading conduct in trade and commerce - and passing off - Distribution of article substantially identical with competitor's known article without indication of its source or distinguishing feature.

Design Act ss.19, 22B(1A) 22B

Trade Practices Act 1974 ss.52 and 53(a)(c) and (d)

Copyright and Designs - Designs - Application for registration - Amendments permissible - "Amend" - Amendments reasonable in scope - Design Act 1906 s 22B(1A)

Trade Practices - Misleading and deceptive conduct - Substantially identical article to competitor's - Absence of indication of source or distinguishing features - Trade Practices Act 1974 (Cth) s 52.

HEADNOTE

Held: (1) The restriction found in the Designs Act 1906 s 22B(1A) (for the text of which see p 140) is not intended to exclude all amendments which introduce some difference in shape and configuration of the article of some new matter outside that disclosed in the original application. It is designed to exclude amendments which extend the scope in some fundamental way and make disclosures clearly beyond those already made.

(2) The placing on the market of an unmarked article substantially identical with another's article and in respect of which an erroneous assumption is likely to be reasonably made by purchasers is conduct which is misleading and deceptive in the sense that it is likely to deceive within the Trade Practices Act 1974 s 52(1).

Parkdale Furniture Pty Ltd v. Puxu Pty Ltd (1982) 149 CLR 191, distinguished.

(3) That conduct also amounts to passing off.

HEARING

Melbourne, 1985, February 5-11; May 3. #DATE 3:5:1985
TRIAL OF ACTION

Trial of actions for alleged infringements of a monopoly in respect of a design registered under the Designs Act 1906; breaches of the Trade Practices Act 1974 (Cth) s 52 and s 53(a)(c) and (d) and passing off. The respondent cross-claimed that the registration was invalid and sought rectification of the registration.

S K Wilson, for the applicant.

J Gilbert, for the first respondent.

M T Bevan-John, for the second respondent.

Cur adv vult

Solicitors for the applicant: Nelson Fox.

Solicitors for the first respondent: W J Gilbert & Co.

Solicitors for the second respondent: R J Clemente.

BAG

ORDER

1. On the application of CFE, that the second named respondent, MWS Extrusions (Australia) Pty. Ltd. be restrained, whether by itself, its servants or agents or howsoever otherwise from manufacturing, distributing, marketing and selling solar mats to which registered design No. 89263 or a design not substantially different from that registered design applies and in particular the ten tube solar mat heretofore marketed by it and from infringing the monopoly of Chris Ford Enterprises Pty. Ltd. in the design registered No. 89263 in respect of the solar'mat the subject of the said design.

2. On the application of CFE and STS, that the second named respondent MWS Extrusions (Australia) Pty. Ltd. be restrained, whether by itself, its servants or agents or howsoever otherwise from marketing, selling or otherwise dealing with ten tube solar mats manufactured by it in accordance with the above mentioned design save that they have ten tubes and not twelve tubes not marked so as to distinguish such mats as the product of MWS Extrusions (Australia) Pty. Ltd. and not the product of STS Solar Pty. Ltd. and not marked so as to distinguish such mats as mats having no connection with the product or the product marketed by STS Solar Pty. Ltd. under the trade name of Solatune or so marketing, selling or otherwise ten tube solar mats in any manner of trade whereby in the course thereof purchasers from the second named respondent or ultimate consumers or intermediate purchasers of the mats are likely to be induced to act upon the understanding or belief that the ten tube solar mats are the product of STS Solar Pty. Ltd., or connected therewith or are or are connected with the mats sold by the company under the trade name Solatune.

3. That the issue of damages be reserved.

4. That there be liberty in each party to apply as it may be advised.

5. The second named respondent pay the costs of the applicants of and incidental to the applications against it.

Orders accordingly

JUDGE1

This application came before me originally as an application for interlocutory injunctive relief by the first and second named applicants Chris Ford Enterprises Pty. Ltd. (CFE) and S.T. Solar Pty. Ltd. (STS) against the second named respondent MWS Extrusions (Australia) Pty. Ltd. (MWS). During the course of the hearing counsel for the parties agreed that the hearing should proceed as the trial of the action and I proceeded accordingly. It was agreed by the parties that contents of the affidavits submitted by the parties should not be inadmissible on the ground that the same were hearsay.

The causes of action relied upon at the hearing were alleged infringements of CFE's monopoly in respect of a design registered under the Design Act 1906; breaches of ss.52 and 53(a)(c) and (d) of the Trade Practices Act 1974 and passing off. The other causes of action adverted to in the statement of claim and relief related thereto were abandoned.

Claims against the first respondent by CFE and STS made in the application were the subject of agreement between it and the applicants before the application came on for hearing and no relief is now sought against the first respondent.

CFE and STS seek, inter alia, to restrain MWS whether by itself, its servants or agents or howsoever otherwise, from manufacturing, distributing, marketing and selling solar mats to which registered design No. 89263 or a design not substantially different from that registered design applied, and from infringing CFE's monopoly in registered design No. 89263. This design relates to a solar mat which is referred to herein as a 12 tube round solar mat.

MWS filed a cross-claim claiming that the registered design is and always has been invalid and seeking an order for the rectification of the Register of Designs by expunging the registration from the register.

Christopher William Ford is managing director of CFE and and a director of STS. Until September 1984 the name of CFE was Endtune Pty. Ltd. Between 1980 and 1982 Ford became interested in swimming pool solar heating systems and in particular with solar collectors comprising rubber tubes joined together in the form of a mat. The principal features of a typical solar mat are that it lies flat on a roof or other surface of length varying according to the requirements of a particular installation. It is made of rubber in such a way that there are parallel tubes sometimes less than one quarter inch in diameter through which water passes longitudinally in the mat and is heated by the sun as it progresses through the tubes. The tubes protrude above the level of the rubber between the tubes. There is, in the mats relevant to this case, an arrangement of rubber at the underneath side of the mat called a key which is intended to facilitate glueing the mat to the surface on which the mat is laid. In mid-1981 Ford approached MWS with a view to obtaining its assistance in developing an appropriate solar mat which MWS might produce in quantity for CFE and which would be marketed by CFE. MWS conducted the business of rubber extruding and Ford had already engaged MWS in the production for it of cable for ignition leads in one of his other enterprises. At the time when Ford approached MWS concerning the possible production of mats there were already a number of solar mats on the market.

During the period of the business relationship between Ford and MWS three solar mats were designed and produced by their combined efforts. The first which was produced around October 1981 was a seven tube mat. The outside configuration of the rubber forming the tube was concave. The tubes were held together by flat rubber. There was a glueing key, that is, a gap section under the mat where the glue was applied. There was a tear line at the bottom of the interconnecting portion between each tube. The second, which was produced about November 1982 was a twelve tube, flat, solar mat which was similar in design to the seven tube solar mat except that there were more tubes on the mat. There was a flat portion between each tube, and the glueing key was modified.

The third solar mat produced was what is called the twelve tube round solar mat. It was produced in February 1983 and went into production by MWS for Endtune Pty. Ltd. (Endtune) This mat differed from the seven tube and twelve tube flat mat in that the top half of the tubes were circular and there was a further variation of the glueing key.

On 24 November 1982 Endtune applied to the Registrar of Designs under the Design Act 1906 for the registration of the design of the twelve tube flat mat. On 4 November 1982 Ford assigned to Endtune Pty. Ltd. as CFE was then known, the full right, title and interest in and to the industrial design "the subject of this application" for registration entitled "Solar Mat". The application referred to was, it seems, the application dated 24 November 1982, mentioned above, which would have been in preparation on 4 November 1982 and which Endtune thereafter pursued. The solar mat referred to was the twelve tube, flat, solar mat. Production of the twelve tube, flat, mat commenced on 8 November 1982. It would have taken some weeks at least after finalising the design to reach production stage.

On 26 June 1984 Endtune applied to amend its application describing the statement of monopoly claimed so that it should read "the design resides in the application of the shape and configuration to a solar mat as illustrated in the representations" submitted. The shape and configuration the subject of the amendment was that of the twelve tube, round, mat described above.

On 26 July 1984 there was issued to Endtune Pty. Ltd. a certificate of registration of the design, a representation of which was attached and the following details had been entered in the Register in respect of that registration, namely:-

"Name of Owner(s): ENDTUNE PTY. LTD.

Address of Owner(s): 1/7 BOUNDARY ROAD, MORDIALLOC, VICTORIA, 3195, AUSTRALIA

Article in respect of which the design is registered: SOLAR MAT

Statement of Monopoly: The design resides in the application of the shape and configuration to a solar mat as illustrated in the representations. The design is of indefinite length and constant cross-section throughout that length.

Statement of Novelty: NIL

Date on which Application for Registration of the Design was lodged: 24 November 1982

Term of Initial Registration: One year commencing on 26 July 1984"

The representation attached to the certificate comprised pictorial views of short lengths of the article, as viewed horizontally from the front, frontally from above and angularly from above. These views disclose clearly that the design as registered is the design of the twelve tube round mat referred to above.

In late March 1983 Ford and MWS terminated their business relationship and CFE and and later STS engaged Mills Rubber Pty. Ltd. to manufacture the twelve tube round mat.

By an agreement dated 18 April 1983 between Endtune Pty. Ltd. and STS and certain other parties STS acquired various assets which although not described in precise terms undoubtedly included the exclusive right to produce articles the production of which had formerly been within the scope of the business of Endtune Pty. Ltd. The solar mat was such an article. At the date of the agreement the twelve tube round design had been put into production by Endtune Pty. Ltd.

Since April 1983 STS has manufactured, distributed, marketed and sold a swimming pool solar heating system incorporating the twelve tube round design in Victoria and Interstate and has built up a substantial business and goodwill in respect of that system. The system is marketed under the name Solatune Solar System.

In October 1984 MWS began to manufacture a solar mat of the same design as that of the twelve tube, round, mat referred to above except that it had ten tubes. MWS has, since then, marketed this ten tube mat by selling it to people whose business it is to instal solar heating systems and other persons. Ford discovered the existence of the ten tube solar mat in November 1984 when he was told by one Gary Helm that the first respondent was selling his product. When Ford attended the premises of the first respondent Badenhop, he found rolls of ten tube solar matting which were for sale. Badenhop carried on business as "Baden Pool Developments" and "Swimbaden Pool Shop" at Frankston, Victoria. Badenhop had purchased the matting from one Ian Daley of Mt. Eliza. Daley asserted to Ford that he was selling the mats on behalf of MWS. Asked why he had told Badenhop that the product was manufactured by Dunlop Daley said he would not answer without legal advice. Ford telephoned Mr. Warren a director of MWS who acknowledged that MWS was manufacturing and marketing the ten tube, round, solar mat.

Designs Act 1906 (Cwth)

Pursuant to s.20(1) of the Designs Act 1906 only the owner of a design is entitled to make application for registration of the design.

Section 19 deals with ownership of a design. It provides:-

"19. (1) Subject to this section, the author of a design is the owner of the design.

(2) Where, in accordance with an agreement for valuable consideration entered into by a person with another person, the other person or an employee of the other person acting in the course of his employment makes a design for the first-mentioned person, the first-mentioned person is the owner of the design.

(3) Subject to sub-section (2), where a design is made by a person in the course of his employment with an employer, the employer is the owner of the design.

(4) The owner of a design or the assignee of any interest in a design may, by instrument in writing signed by him or on his behalf assign to another person the whole or any part of his interest in the design."

The respondent contends that CFE, formerly Endtune Pty. Ltd., is not entitled to be registered as the owner of the design the subject of the certificate of registration. The only ground of non entitlement relied on is the contention that CFE was never the owner of that design. Two issues present themselves:

1. Who was the author of the design? Both Ford as representing CFE and David Snowden, as representing the second named respondent, claim authorship.

2. If Snowden or MWS was the author of the design, then, was it made by Snowden in accordance with an agreement with CFE for valuable consideration?

Ford asserted that in relation to the development of the solar mat it was he who produced basic designs of the three mats. He said he set out his diagrams on graph paper with the features he desired and submitted them to MWS who refined the design in order to facilitate manufacture at the most economical rate. It is not disputed by Snowden that Ford had contributed by written drawing to the design of the seven tube mat and by verbal contribution, at least, to the design of the twelve tube flat solar mat, that being the mat with concave top and sides of the tubes on the top portion of the mat. Snowden asserts, however, that he designed the glueing key for both those mats. As to the twelve tube round mat he claimed that he initiated the idea of making the tubes round and actually designed the whole of that mat, there being no drawing by Ford in connection therewith.

The question whether Ford or Snowden was the author of the critical design, namely, the twelve tube round mat depends on an assessment of the evidence given by each man. According to Ford it was he who had produced a drawing of the design of the seven tube mat on graph paper indicating in very basic terms the nature of the design that he required, that this was discussed with Snowden who produced a drawing. Ford said that he would use it in his application for registration of that design. It is apparent that at all material times Ford intended to patent or register whatever design was adopted. His patent attorney had advised that the design of the mat could be registered.

It appears that Snowden made refinements to each design. Snowden stated that the original seven tube design presented by Ford to him was a particularly rough drawing on the back of an old invoice. It is clear, however, that in respect of that design both Ford and Snowden recognized that it was the property of Ford. As stated by Snowden in his affidavit of 1 February 1985:

"I refer to paragraph 4 of the further affidavit. I had offered on behalf of MWS in November 1981 to draw up a design so that a die could be manufactured in November 1981 so that MWS could manufacture solar mats for Chris Ford. That design envisaged a seven hole solar mat. Ford was to pay for the tooling, whatever it cost, and, as was usual practise with all customers for MWS, MWS would not charge for the drawing up of the tooling design. Of course the customer would pay for the cost of the acrtual tooling and out of pocket expenses associated therewith. Of course I agreed that the drawing was to be for Chris Ford, since the product was to be manufactured for him."

As to the second design, namely, the twelve tube flat, Ford said that he conceived the idea of increasing the number of tubes that could be included in the marketable rolls of mat and asked Snowden what was the maximum width that could be manufactured and was told, 120 millemetres. Ford said he then calculated that by modifying the design of the glueing key a twelve tube mat could be produced. He said that he produced a sketch drawing on graph paper and gave it to Snowden and that from that sketch drawing Snowden produced a final design for the twelve tube, flat, mat. Snowden denied that Ford gave him any drawings of the proposed twelve tube flat design. He said that the design of the twelve tube flat, was the result of a conversation between him and Ford in which Ford asked how many tubes could be produced by Snowden's extrusion equipment and was told that twelve tubes could be produced and that Ford requested Snowden to go ahead and produce the necessary design for the mat as a twelve tube mat. Snowden said that all the design work for this project was performed by him.

Although in his evidence Ford stated that he made the first drawing of the top part of the twelve tube, round, the ultimate design produced by Snowden contains features, particularly in the lower portion defining the key, different from those in any other previous design or as outlined by Ford. Ford said, in that connection, that as the development progressed, Snowden explained to him that considerably more work was being done on the design than was originally anticipated and that he, Ford, agreed to pay MWS for the design work which it did for Endtune. Snowden denied this.

As to the nature of authorship of a design for the purpose of s.19 of the Act it would appear from definition of design in s.4(1) of the Act and the terms of s.19, that except in the case of an employee or of a design made by a person for valuable consideration, authorship is in the person whose mind, conceives the relevant shape configuration pattern or ornamentation applicable to the article in question and reduces it to visible form. See Ricketson, The Law of Intellectual Property First Edition p.480.

Thus, the question arises, perhaps in the short form, whose idea was it that the features, shape and configuration of the article being the twelve tube round mat as produced by MWS for CFE should be what they were. Of course that shape and configuration was the result rather of functional or practical production considerations rather than considerations of what might appeal to the eye. But this is, no doubt, not important for this case. The incentive to produce a design to supersede that of the twelve tube, flat, mat was the difficulty encountered by MWS in manufacturing the mat satisfactorily. It is clear that Snowden contributed to the ultimate design adopted. Even accepting that Ford produced the first drawing showing the rounded, rather than flat sided tube it is apparent that that would only be the design of the upper portion of the mat. And it is clear that Snowden "refined" that upper portion and changed the lower portion from what it had been in the twelve tube flat design. Accordingly, Snowden would seem to be at least a co-author of the ultimate shape and configuration of the article. But if it was Ford who conceived the idea of the rounded tube mat and communicated it to Snowden and not the other way round then Ford was also a joint author of the ultimate shape and configuration, the design, applicable to the article. Accordingly, unless the shape or configuration of the twelve tube round solar mat was conceived and in that sense made, by MWS or by Snowden as an employee of MWS pursuant to an agreement for valuable consideration between CFE and MWS, CFE would not be the sole owner of the design of the twelve tube round solar mat.

The second question therefore arises, namely, so far as Snowden performed acts of authorship did he do so for MWS and in accordance with an agreement for valuable consideration between MWS and CFE. If it be the fact that Ford communicated to Snowden the idea of the rounded tube verbally or by a drawing and asked Snowden to prepare the necessary design drawings, and also the fact that Snowden had indicated that he desired to be compensated for his design work, then, so far as the design was the work of Snowden it was "made" by MWS in accordance with an agreement for valuable consideration with CFE. The enquiry as to those facts inevitably raises an issue of credibility as between Ford and Snowden. Both men are intelligent, alert and keen business men. I would be surprised that either deliberately has testified falsely. Yet there is a direct conflict, I have concluded that I should accept Ford's evidence that in the negotiations relating to the project Snowden did indicate that the work associated with the design was heavier than anticipated and that it was agreed that Ford should pay for it. I have concluded also that the idea of making the tubes round, was Ford's and that he produced to Snowden a drawing thereof and requested Snowden to prepare the necessary design drawings for the die and other tooling to go ahead with production of the twelve tube, round, mat. Ford and Snowden were therefore joint authors of the twelve tube round design.

On the issue of credibility there are various relevant considerations. First there is the assertion of Snowden that in relation to the design of the twelve tube, round, that he created the design and offered it to Ford. He said that when he showed Ford the twelve tube round design he told him that he would not have exclusive use thereof. According to Snowden the previous course of dealing whereby designs of proposed products became the property of the customers of MWS was inapplicable to the design of the twelve tube round design. In his affidavit of 14 December 1984 Snowden said:

"7. MWS stopped producing this design on the 17th January 1983, since Ford was still unhappy about the price of this solar matting, thinking it too expensive.

8. In or about the first week of February 1983 I approached Ford and told him that I had created another design which I considered more economical and easier to manufacture. (In the extrusion of the first 12 tube design - "MWS2" - difficulties had been experienced in maintaining the uniform cross section as designed.)

. . .

11. I told Ford during the following week, showing and explaining to him the features of my design, that he could use my design if he paid for the manufacture of the extrusion die. I did not say that he would have exclusive use of this design. He was happy to accept this proposal.

12. On the Saturday 5th February 1983 Ford asked me to let him have a copy of this drawing. On that day I did not have access to a copying machine and he said that he would do the copying. I let him have my original drawing and on the following Monday morning he gave me a copy of it. He retained the original drawing.

. . .

15. MWS manufactured solar mats to the February 1983 12 tube design until the 23rd March 1983 when, because of a falling out between the parties, it was agreed that MWS would cease its manufacture. The extrusion die described above was given to Ford in person subsequently.

16. Following trade requests from about June 1984, in or about October 1984 the 10 tube solar mats presently made by MWS went into manufacture."

There is no evidence that Snowden was an employee of MWS. He was, however, a director and the inference from the evidence is that he had executive authority to bind the company in the matter of concluding contracts with customers of MWS in its manufacturing business including the rendering of assistance to customers with respect to the designing of articles to be manufactured by MWS.

Accordingly, a design made by Snowden in accordance with that aspect of the business of MWS would, according to accepted concepts, be a design made by MWS. Clearly, such work as was done by Snowden in the production of the design of the twelve tube, round, solar mat, constituted the making by MWS of the design.
It is my view that there was an agreement between Ford on behalf of CFE and Snowden on behalf of MWS that in contemplation of the twelve tube round design going into production MWS or rather Snowden acting for MWS should complete and refine the design, and produce the die and other incidental tooling to commence production of the solar mat in accordance therewith and CFE would pay a reasonable sum for those services. Thus the design was made pursuant to an agreement for valuable consideration. That the agreement was such as is described above appears to me to be the appropriate inference from the evidence. It is clear that with respect to the work done by Snowden in connection with the design of the seven tube mat and the twelve tube flat mat the terms of trade were that, notwithstanding that Snowden contributed to the making of the final design in each case, the design belonged to CFE. It appears to me to be probable that whether or not Ford approved the final design made by Snowden and engaged MWS to produce the article the design would have been the property of Ford or CFE but it is not necessary to decide this. It is contended however, by Snowden that the terms of trade in respect of the twelve tube, round, design were different from those with respect to the two earlier designs, namely, that CFE should have no more than permission to use the design for production purposes and the ownership was to be in MWS.

It is to be noted that in para.11 of Snowden's affidavit there is no suggestion that Snowden said to Ford that he was not to have exclusive use of the design. The only statement is that he did not say he was to have exclusive use of it. And that was how the matter stood until, in cross-examination, he said, "at the time I designed the product I gave an undertaking to Ford that he was allowed to use the design but that he would not have exclusive rights to it". Amplifying this he said, "my exact words were, "You may use the design but you will not have exclusive rights to it". He was asked, "That is to say, you were saying to him that you would have the right to let other people do the same thing and that you might well do that" and answered "That is correct". Further emphasis was given to this in the course of Snowden's evidence. He said that it was made perfectly clear by him to Ford that Ford was to own the tooling but he held the design, and Ford understood that if MWS made another set of tools it was in a position, either itself, or by licensee to produce and market the twelve tube round mat. Again, Snowden said, "It was always explained to Ford that he had no rights to the design of the last twelve hole design.".

It is clear that in February 1983 Snowden had no intention of entering upon the business of manufacturing solar mats in competition with CFE or at all. Thus motivation on his part to establish, as between himself and Ford, that the legal situation relating to the design of the twelve tube, round mat was different from that relating to the designs of the other mats sprang, if at all, not from a desire that MWS should exploit the design commercially for itself, but rather from some pride of authorship or other non-commercial factor or a long range instinct to protect his interests in case of developments neither contemplated nor imagined. Nevertheless Snowden claims that from what was said and done in relation to the twelve tube, round, design it would be and was quite clear to Ford that Snowden was unambiguously asserting that the design was his so that he could permit other people to use it to produce a mat in accordance with it and that MWS might use it itself in going into production of a mat of that very design in competition against CFE. And from his evidence it would appear that Ford accepted this situation and did so without demur. And what was involved was that CFE was to pay for the die and would own it no matter how much or how little production there was for CFE, but that MWS might, for production by it or its licensees make another die or dies of the same design for use by it or other competitiors in the production of the solar mat. And the time when these stipulations were said to be made each party contemplated and hoped that production of the mat by MWS would proceed at a pace, in large quantity and indefinitely for CFE to be marketed by it in its business of selling solar heating systems and MWS would do satisfactory business manufacturing the mat.

It is to be noted that at each phase of evidence where this matter is approached Snowden refrains from deposing to any words expressly asserting ownership of the design. In his evidence he expands his intimation to Ford from "I did not say that he could have exclusive use of the design", which is found in his affidavit, to "at the time I offered the design I said you may use the design, and this is why we have never restricted him in using the design, but he would not have exclusive rights to the design".

For Snowden to say to Ford that he could use the design would be one thing and would be without relevant significance. But for him to say to Ford that he would not have exclusive use of the design would be quite another. It would have been calculated to evoke the question "what do you mean?" or "who else is going to use it, and for what purpose". On the basis of Snowden's claims the answer would have been "well as owner of the design I may license other people to use it to produce a mat in competition with you or I may make such a mat and sell it in competition with you." And according to Snowden, Ford understood all these things. However, I cannot accept either that Snowden said "you are not to have exclusive use of the design" or that Ford was made to understand in any way that Snowden was claiming to be the owner thereof. The threat of competition in marketing an article which Ford had been developing and marketing on the ground that Snowden had made changes in the design would have been likely to take Ford by suprise and cause him alarm. That he was to pay for the die to produce the article, pay Snowden a reasonable price for the production and be open to competition from Snowden himself and any licensee of Snowden's would inevitably have startled him. Having seen Ford in the witness box I am satisfied that any such claim from Snowden would have been vigorously opposed. Yet there were no harsh words between them or any suggestion of a flutter in the serenity of their relationship. Snowden was no doubt looking for good business if the article could be economically produced. The notion that the work he did on the twelve tube round design brought about a change in the terms upon which he had done work on the previous design, whatever that work, was in my view never present to his mind or Ford's at any time when Snowden and Ford were working together to work out the best design for the advantage of Ford as a trader and Snowden and Snowden as a manufacturer. So far as Snowden was concerned the question of ownership of the design only became of any importance when for the first time MWS conceived the idea that production of a ten tube mat of the same design might be profitable. And if MWS had full right to produce a mat the same as that of the design in question and Ford fully understood that MWS was entitled to do so, then, notwithstanding Snowden's explanation for choosing to produce a ten tube mat, one wonders why it was not sold under a distinctive name belonging to MWS.

And all this may be considered by reference to the invoices which were sent to Ford by Snowden with respect to design and tool modifications for firstly, the twelve tube flat mat, and secondly, the twelve tube round mat.

In relation to the twelve tube flat mat an invoice in the following terms was delivered, "Tooling modification and redesign to twelve hole solar die.". The charge was $1,500. According to Snowden there is in this charge no component for the work done by Snowden for the design, but nevertheless, it was understood that it belonged to CFE. In relation to the twelve tube round mat the charge was $1,125 for "modification and redesign of solar die to new specifications". On the face of this invoice it would not be unreasonable to infer that a charge was being made for the redesigning work and the tooling of the proposed twelve tube round mat, or alternatively, that the same understanding subsisted, that is, that the product and its attendant rights, belonged to CFE.

It is the case for Snowden that with repect to the design of the twelve tube round mat the legal position concerning the ownership of the design had completely changed. No longer did the design belong to CFE with all the advantages attached to ownership, but CFE had but a licence to use the design, the ownership, with all its advantages, being in MWS. But there is no hint of any such situation in the terms of the invoices. Indeed, with respect to the twelve tube round mat, the charge is being justified on the ground that CFE has changed the specifications. Of course whether or not the new design belonged to Snowden or to Ford, it was true, in a sense, that CFE had changed the specifications. Whoever initiated them they were ultimately the specification which Ford desired for the product. But if the design belonged to Snowden it was equally true that the new die was being made "according to our design" as to CFE's specifications. It would seem strange that Snowden, who was so careful to explain, in relation to the twelve tube round design, that it belonged to him and that Ford was merely a licensee, would not have been alert to avoid anything that might give rise to ambiguity on the matter when putting pen to paper. And I do not think Snowden was a man to fail to protect his situation, where he was making a business stipulation.

It is difficult to gather from the evidence precisely what, in the circumstances, the words "modification and re-design of solar die to new specifications", mean, in their ordinary and natural meaning. The new specifications were round tubes instead of concave together with a new design of the key and some minor modifications to the configuration of the twelve tube flat mat. The redesign of the solar die was the making of a design to incorporate these features. And the design so made appears to be the same in all respects, indeed the very same drawing, as what is called the cavity drawing given to the die maker to make the die. Accordingly, to speak of redesigning the die is to speak of making the actual drawing which is in all respects the new design, whether considered simply as a design or as the cavity drawing. There were other drawings to be made to complete the new tooling but they appear to have been relatively minor. It follows that when one refers to redesigning the die one is referring to the very operation of designing the twelve tube solar mat. I am unable to think that if Snowden really had in mind that that design belonged to him for MWS there would have been some indication to that effect in the terms of the invoice. It may also be observed that if Snowden regarded designing the new round mat as something apart from modifying and redesigning the die to new specifications, the expression "modification and redesigning the die" was hardly apt, to indicate that the charge made related only to the die. Once the mat was redesigned all that remained to be done to the die was to make it in accordance with that design. The cavity drawing required for that purpose was identical with the design drawing. There was no separate operation of redesigning the die. It was automatically "redesigned" when the design of the twelve tube round mat was completed. If the notion was that Snowden alone made the new design and was not charging for the making of the design the natural description of the work done in respect of the die would have been "making the die" not redesigning it. But if the concept were that the work performed by Snowden in designing the twelve tube round mat and making a die in accordance with that design was the work to be charged for, the description of that work as "modification and redesign of solar die to new specifications $1,125" is an apt general description of it.

I think, in the circumstances, a fair reading of the terms of the invoice supports the view that Snowden was charging for the total work including what he did in designing the twelve tube round mat. And the fee of $1,125 was, I think, intended to include the charge for the work of redesigning the mat. The terms of the invoice are such as would flow naturally from the pen of a man who had no thought of making any claim to the ownership of the design.

I do not accept the evidence that Snowden told Ford that he would not have exclusive use of the final design of the twelve tube round, mat. Snowden had no notion at the relevant time that MWS would wish to use that design against the interests of Ford or CFE. I consider that whatever part Snowden played in the production of the final design, subject to Ford's agreement to pay for the design work of the twelve tube mat, he acted according to the existing practice and arrangement between MWS, Ford or Endtune, that being in the business of manufacturing articles for his circumstances according to designs worked out between the customers and himself, the designs belonged to the customer. Snowden was a competent draftsman and assistance with design problems was "part of the service". In the context of credibility between Ford and Snowden I have had regard to what I consider the probabilities and they appear to me to support the version of the relevant facts given by Ford. I have had regard also to the demeanour of each man. In that respect I found Ford to convey satisfaction to my mind in respect of the matters at issue in a way that Mr. Snowden did not do. I think the explanation of the conflict is that Snowden having decided to exploit the design in competition with STS in the hope of being able to succeed in marketing his ten tube mat found himself in the awkward position of having to justify that conduct and had to persuade himself that the facts justified it and he succeded in that.

Accordingly, CFE was the original owner of the design and as the registered owner thereof has been entitled to register the same.

Validity of the Amendment

In the presentation of the case a question arose as to whether the amended application No. 89263 was an application made originally in respect of the design of the seven tube mat. It appears, however, that the application in respect of the seven tube mat was an entirely separate application No. 86363 and is not of signifiance in the current issues.

It is contended for MWS that the June 1984 amendment of the original application for a design of the twelve tube mat as at 24 November 1982 was invalid. Section 22B (1) of the Designs Act 1906 provides that the Registrar of Designs may, on request made to him in the prescribed manner, amend an application for registration of a design lodged under the Act. Section 22B(1A) provides:-

"(1A) An amendment under sub-section (1) shall not be made if, as a result of the amendment, the scope of the application for registration would be increased by the inclusion of matter that was not in substance disclosed in the application for registration as lodged.

(2) An appeal lies to a prescribed court from a refusal by the Registrar to amend an application under sub-section (1).

(3) In this section -

"amend", in relation to a representation of an article to which a design is applied, includes the substitution of one representation for another representation;

"application for registration of a design" includes the representations of the article to which the design concerned is applied and any statement of monopoly or statement of novelty in respect of the design."

Mr. Bevan-John for MWS submitted that the twelve tube round solar mat which was registered was in its design features, a substantially changed version of the twelve tube flat which was the subject of the original application. He said that the re-designed top half of the twelve tube round together with modifications to the glueing key increased the scope of the application and included matter not substantially disclosed in the original application.

Mr. Wilson for CFE contended to the contrary. He pointed out that there are still twelve tubes made of rubber in a mat, admittedly with a differently shaped top half and slightly differently shaped key arrangement. But the scope of the application was not increased and there was no disclosure of matter not substantially disclosed in the application. Section 22B(1A)(3) defines the expression "amend" in relation to the representation of an article to which a design is applied to include the substitution of one representation for another. Such an amendment as that made in this case would seem to be within this definition.

The definition of "amend" is in liberal terms. The substitution of one representation for another must disclose something not disclosed in the application before amendment. It would seem therefore, that the restriction found in s.22B(1A) is not intended to exclude all amendments which introduce some difference in shape and configuration of the article or some new matter outside that disclosed in the original application. It would seem that it is designed to exclude amendments which extend the scope in some fundamental way and make disclosures clearly beyond those already made. It may be noted that the terms of s.22B(1) and s.22B(3) constitute precise positive statutory permission whereas the terms of s.22B(1A) are in a sense imprecise and call for the exercise of judgment. Reading the sections as a whole it is proper to conclude that Parliament intended genuine amendments reasonable in scope should be permissible and that the restrictive provisions of s.22B(1A) should be interpreted accordingly.

The amendment in this case being within the statutory definition the questions are whether, within the meaning of s.22B(1A), there is in it an increase in the scope of the application or the disclosure of matter not substantially disclosed in the original application. To my mind the scope of the application as lodged extended to the representation of the article specified therein and the constituent design features thereof. The scope of the original application and the matter disclosed therein were constituted by the nature of the relevant article and its constituent elements of design. There are no additional elements in the amendment. It is essentially and genuinely an amendment of elements of the twelve tube solar mat represented in the application. And in my opinion, the change in shape does not, in the relevant sense, disclose a matter not already substantially disclosed. What was already disclosed was a twelve tube solar mat with tubes forming the upper portion and a key arrangement in the lower portion. The amended application was for registration of the design of an article, both the design and the article being basically the same as those of the original application. If it were correct to say that the amendments, which certainly changed design features, were such as to contravene s.22B(1A) that would reveal a situation in which the power of amendment would be so circumscribed as, to my mind, to frustrate the legislative intention. The certificate of registration provides that:-

"The design resides in the application of the shape and configuration to a solar mat as illustrated in the representations. The design is of indefinite length and constant cross section through that length."

There is, in my view, in the representations referred to, no increase in scope or disclosure of matter not substantially already disclosed in those in the original application.

Accordingly, I find that CFE has been the owner of the design of the twelve tube round solar mat since early 1983 and the registered owner of the design since 26 July 1984 and entitled to the benefits arising therefrom.
Infringement

It is contended by Mr. Bevan-John that the marketing by MWS of the ten tube solar mat is not shown to infringe the monopoly of CFE in the design. Mr. Wilson submits that MWS has applied and intends to continue to apply CFE's design, or a fraudulent, or at least an obvious imitation thereof, to an article in respect of which the design is registered.

The design in question is registered in respect of a solar mat as illustrated in the representations contained in the certificate of registration. Apart from the fact that the mat illustrated in the certificate contains twelve tubes whereas the mat marketed by MWS has ten tubes the latter mat is, and is conceded to be, in exact conformity in all respects with every characteristic of the mat the subject of the registered design.

The statement of monopoly relates to the scope and configuration of the mat as illustrated. As pointed out by Kitto J. in the matter of Wolanski's Design (1953) 88 CLR 278 at 279 the proprietor of a design gets by its registration a monopoly for one thing only, and that is, "a particular individual and specific appearance". It is a matter of impression whether a mat which has the identical attributes with a mat of the twelve tube round design could be described as a fraudulent or obvious imitation or perhaps something more. A three tube mat or a four tube mat, for example, would not constitute such an imitation. However, in this instance there is a ten tube mat produced by Snowden in identical form save for the absence of two tubes of the mat for which CFE has the registered design. In order to decide whether the ten tube mat is an obvious imitation is it necessary to look at the two designs and judge by the eye between them as to whether the one is an imitation of the other or not; see Dunlop Rubber Co. Ltd. v. Golf Ball Developments Ltd. (1931) 48 RPC 268 at 279 per Farwell J. In the course of normal observation and ordinary relevant affairs it would be apparent that the MWS mat differed from the STS mat only upon the counting of the relevant number of tubes. I have no doubt that the design of the mat marketed by MWS is, at least, an obvious imitation of that of the mat illustrated in CFE's certificate of registration of its design and mat. This is not surprising since the MWS mat was made from a die identical with that of the STS mat. The absence of the two tubes is for the purposes of observation trivial. It makes no real distinction between the two designs.

Accordingly, I find that CFE was the owner of a registered design, which was properly registered and which protected CFE's monopoly over a twelve tube solar mat which had certain features, and that MWS by producing and selling its ten tube solar mat, infringed the monopoly of CFE.
Section 52 of the Trade Practices Act

In relation to both this and the passing off action a question has been raised as to the standing of STS to bring or participate in such proceedings. That is put on the basis that there has been no assignment in writing of design rights from CFE to STS to manufacture and market the twelve tube round solar mat. It appears to me that this suggestion is misconceived. The causes of action depend not on design protection but on misleading conduct generally in trade and commerce. The critical factor in this case is that STS has a business and good will which is in danger of damage from the conduct of MWS.

The relationship between CFE and STS proceeds pursuant to an agreement the whole purport of which was to grant to STS the rights to take over completely from CFE its business related to solar products. This included permission to use CFE's designs and to produce and market the products accordingly. STS did this and the evidence discloses $340,549.43 in gross sales of the twelve tube round solar mat from July 1983 to October 1984. It is apparent that STS has an extensive business and has developed goodwill in respect of the marketing of the Solatune solar mat. It contends that MWS in producing and selling a ten tube unmarked solar mat has engaged in misleading and deceptive conduct which has adverse effect upon it and that MWS intends to continue to engage in such conduct.

In relation to the claim that the conduct of MWS has been misleading and deceptive or likely to be so it is said that MWS entered the established market of STS with its ten tube mat knowing that STS had established a market for its mat and knowing all about the product which STS sold. The MWS product is, excepting for the number of tubes, of identical design. The applicants put much reliance on the circumstance that MWS does not identify the ten tube mat by labelling with any name. Nor does it use any explanatory booklet or market its mat in association with marked manifolds or other ancillary equipment. The STS mat is marketed in association with an explanatory booklet and manifolds marked "Solatune". Absence of identification of an otherwise matching product is adapted, so it is said, either deliberately to deceive consumers, or, leaving aside all intention, has or is likely to have that effect.

The applicants rely on the evidence of Gary Helm a plumber, who contacted Ford and alerted him to the fact that the first respondent was selling a product identical to that of STS and, it appears, that Helm had bought that product himself and had taken it for an identical copy of the mat marketed by STS.

The applicants also rely on the evidence of Ford himself. He went to the first respondent's shop where he sighted the ten tube matting and the salesman attempted to sell him that matting using the STS booklet to explain its installation.

Although MWS could not be held responsible for the conduct of third persons not within its control: see Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd.(1982) 42 ALR, it is said that, in marketing its matting MWS sets up a situation in which its product will probably pass through the hands of various parties likely to have knowledge of the STS Solatune mat in the course of commerce. It lays the foundation for deception by the appearance of its mat and the absence of labelling or identifying its product. The STS twelve tube round solar mat itself discloses no markings on the actual rubber mat. But there were distinctive STS Solatune markings on the manifolds which normally form part of the mat and its equipment as displayed for sale and installation.

As well as STS a number of other solar mat producers provide a publication identifying and describing their product and the method of its installation. The selling of an unmarked product substantially similar to that of an established product already available on the market without any accompanying explanatory material could itself be seen as conduct by MWS which is misleading and deceptive or likely to be misleading and deceptive. However, this conduct cannot be viewed in isolation. It is necessary to identify the relevant market, the relevant section of the public to whom the conduct is directed. Snowden stated that MWS sells to members of the solar pool heating trade and explains that the mat is its product. I am not satisfied that only such persons were customers of MWS and the possibility that the explanation may not always be given is obviously very real. Members of the trade might be expected to be aware of the various solar mats and installation systems available on the market. However, in the absence of an intimation by MWS to a purchaser that the mat it was offering was not an STS mat there would be a distinct probability that many a purchaser aware of the STS mat observing the identity of the configuration, colour and general nature of the ten tube mat with it, would take the ten tube mat as an STS alternative version of its mat. It was pointed out that if installers being faced with a ten tube mat which was to all intents and purposes a copy of the STS twelve tube mat would naturally look at the STS brochure to assist them with installation. And an important circumstance is that in its journey to the consumer the ten tube mat is likely to pass through the hands of various merchants or dealers and is likely to be dealt with by them in shops and other locations in association with the same class of goods where the STS brochure and installation instructions are visibly and conveniently displayed.

Even if MWS usually sells to the trade and makes its profit therefrom it is inevitably reasonable for it to realise that its product would be sold to members of the public through various hands. This was the case of course in relation to the incident involving Daley-Badenhop. The absence of material accompanying the product and identifying the ten tube mat as the product of MWS or distinguishing it from the product of STS takes on significance. Whatever is said by MWS to a purchaser of mats from it there is no control over purchasers and every prospect that subsequent purchasers will be misled either by silence or by being given false information. As indicated above Snowden himself felt the necessity to indicate to purchasers that the ten tube mat was not an STS product. Whereas in Puxu v. Parkdale Furniture Pty. Ltd. (1982) 42 ALR 1 substantially similar furniture was sold by the appellant which had distinguishing labelling on it, there is, in this case, a substantially similar unidentified product the source of which an enquiring customer could not ascertain by searching for a label. When MWS put on the market its unmarked article substantially identical with the applicant's article and in respect of which an erroneous assumption is likely to be reasonably made by purchasers its conduct is misleading and deceptive in the sense that it is likely to deceive.

A person who was aware of Solatune matting entering a shop and seeing a slightly smaller version of the identical product with a marked price variation, as there was in this case, would not be put on enquiry. There would be nothing to make him doubt that the same mat came from the same source. The chances of his receiving accurate information even if an enquiry were made are not supported by what occured in the Daley-Badenhop incident.

Accordingly, MWS in marketing the ten tube mat unmarked and launching it into potential chains of commercial transactions did engage in misleading and deceptive conduct within the meaning of s.52 of the Act.

Passing Off

In relation to this cause of action there are five characteristics which must be present in order to create a liability in a party. They are:

1. a misrepresentation;

2. made by a trader in the course of trade;

3. to prospective customers of his or ultimate consumers of goods or services supplied by him;

4. which is calculated to injure the business or goodwill of another trader (in the sense that it is a reasonably forseeable consequence); and

5. which causes actual damage to a business or goodwill of the trader by whom the action is brought or will probably do so.

See per Lord Diplock in Warnick v. Townsend and Sons (Hull) Ltd. (1979) AC 731 at 754. See also Taco Company of Australia Inc. & Anor v. Taco Bell Pty. Ltd. & Ors. (1982) 42 ALR 177 at 187.

The critical question in relation to this part of the applicants' case is whether there was a misrepresentation by MWS to immediate or ultimate consumers of the ten tube mat supplied by it.

It was put that the misrepresentation in this case was constituted by the marketing of an article visually and qualitatively so nearly identical with the product of STS as to be likely to be thought to be the product of STS by persons acquainted with that product and who are introduced to the MWS product into trade and commerce as, it passes through the hands of successive merchants or dealers to an ultimate consumer, the article being unmarked and without identification of any kind or any indication that it was not the product of STS.

It is a reasonable conclusion that a product identical in the sense mentioned above and not distinguished in any significant way from a known product is likely to carry with it, in circumstances such as those discussed above a representation that it is the same product as the established product or one of the range of products of the established trader. It might be said to be an inevitable consequence of the adoption of the marketing technique by MWS.

In this case when MWS sold its ten tube mat it sold it to members of the trade who might know that there was a distinction between its product and that brought out by STS. In any case Snowden said he told persons to whom he sold the ten tube mat that it was not Solatune. Snowden recognized that that was necessary to avoid error on the part of purchasers from MWS. MWS contended that having expressly notified its buyers that the ten tube mat was not Solatune it went as far as it needed to go and it could not be responsible for the inferences that subsequent purchasers might make from the appearance and nature of the mat sold by MWS. I cannot accept this. The probable circumstances in which subsequent sales are likely to be made, namely in the presence of brochures of STS by persons having no interest to inform potential purchasers of the source of the article and where potential purchasers are not put on notice of any reason to doubt the appearances, are all circumstances likely to lead to error on the part of purchasers. The making of an erroneous comment by a vendor to the purchaser of the mat is facilitated by the appearance of the mat and the absence of any distinguishing mark. All these circumstances and probabilities are matters inevitably within the reasonable contemplation of MWS when the article is launched into the market. The unmarked identical article itself makes a statement of relationship with STS and it is that statement which MWS has sent into the commercial world.

This misrepresentation has been made by MWS in the course of trade, and even if not to its immediate purchasers, it has been made to subsequent purchasers of the product. In the statement of Lord Diplock set out above he refers to prospective customers and ultimate consumers. Intermediate purchasers are inevitably included.

It is a reasonable inference that the misrepresentation made is calculated to injure the business and goodwill of STS. It is a reasonably forseeable consequence of the misrepresentation by MWS. The intention of MWS is no doubt to exploit the market at the expense of the market share of all other traders but having regard to the similarity of its product to that of STS and the availability of the brochures and installation manuals of STS the probability is that it is the market share of STS which will suffer most from the trading of MWS. The availability to purchasers of practically the same product at a cheaper price is likely to result in sales of the ten tube mat at the expense of the twelve tube mat of STS. The conduct of MWS is therefore likely to injure the business and goodwill of STS.

In this case the MWS mat was discovered very early by the applicants, within one month of it being put on the market, and there is no evidence of any actual damage suffered by STS. However, it is inevitable that should MWS continue to trade in its established manner the business and goodwill is likely to suffer substantially. And it is the intention of MWS to continue so to trade.

Accordingly, the applicants must succeed in relation to all the causes of action raised and pursued by them at the trial and I make the following orders:-

1. On the application of CFE, that the second named respondent, MWS Extrusions (Australia) Pty. Ltd. be restrained, whether by itself, its servants or agents or howsoever otherwise from manufacturing, distributing, marketing and selling solar mats to which registered design No. 89263 or a design not substantially different from that registered design applies and in particular the ten tube solar mat heretofore marketed by it and from infringing the monopoly of Chris Ford Enterprises Pty. Ltd. in the design registered No. 89263 in respect of the solar mat the subject of the said design.

2. On the application of CFE and STS, that the second named respondent MWS Extrusions (Australia) Pty. Ltd. be restrained, whether by itself, its servants or agents or howsoever otherwise from marketing, selling or otherwise dealing with ten tube solar mats manufactured by it in accordance with the above mentioned design save that they have ten tubes and not twelve tubes not marked so as to distinguish such mats as the product of MWS Extrusions (Australia) Pty. Ltd. and not the product of STS Solar Pty. Ltd. and not marked so as to distinguish such mats as mats having no connection with the product or the product marketed by STS Solar Pty. Ltd. under the trade name of Solatune or so marketing, selling or otherwise ten tube solar mats in any manner of trade whereby in the course therof purchasers from the second named respondent or ultimate consumers or intermediate purchasers of the mats are likely to be induced to act upon the understanding or belief that the ten tube solar mats are the product of STS Solar Pty. Ltd., or connected therewith or are connected with the mats sold by the company under the trade name Solatune.

3. That the issue of damages be reserved.

4. That there be liberty in each party to apply as it may be advised.

5. The second named respondent pay the costs of the applicants of and incidental to the applications against it.