Digga Australia Pty Ltd v Norm Engineering Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Digga Australia Pty Ltd v Norm Engineering Pty Ltd

[2008] FCAFC 33

COPYRIGHT – infringement – respondent manufactured and sold buckets for use with Bobcat in accordance with engineering drawings it prepared for the bucket components – the drawings were in computerised form – appellant “reverse engineered” from respondent’s bucket to enable it to manufacture and sell its buckets and, to that end, to prepare engineering drawings – whether appellant effected two-dimensional and three-dimensional reproductions of respondent’s drawings of the bucket components – respondent’s drawings reduced three-dimensional prototype of bucket to two-dimensional form - respondent’s drawings recorded electronically on computer by use of computer aided design (CAD) system –– primary Judge found respondent had copyright in drawings created in September 2003 – whether primary Judge was entitled to so find – unclear state of evidence as to when drawings came into existence – primary Judge’s finding that drawings came into existence as culmination of “process of “origination” over lengthy period culminating in September 2003 –whether that finding sustainable on the evidence – testimony of respondent’s managing director to effect that drawings made in early 2002 – whether respondent had proved that its bucket that was inspected and copied by appellant was manufactured in accordance with the drawings sued upon – if not, whether respondent had failed to prove unbroken chain of causation between its drawings in which copyright subsisted and appellant’s drawings and buckets – operation of s 77 within Div 8 of Pt III of the Copyright Act 1968 (Cth) prior to the Designs (Consequential Amendments) Act 2003 (Cth) – whether s 77(2) excepted from infringement appellant’s two-dimensional reproductions (drawings) that came into being as steps on the way to appellant’s three-dimensional reproductions of the buckets – whether appellant’s drawings were articles of manufacture – whether in the case of one component (Pivot Arms) there was a “design” and therefore a “corresponding design” following the Designs Amendment Act (1981) (Cth) - effect of changes to Div 8 made by the Designs (Consequential Amendments) Act 2003 (Cth) as from 17 June 2004.
Held: (1) on the evidence, the primary Judge was entitled to find that the requisite degree of originality was established for copyright to subsist; (2) on the evidence, the primary Judge was entitled to find the necessary causal chain was established; (3) prior to 17 June 2004 s 77(2) of the Copyright Act did not except from infringement drawings prepared in the course of the manufacture of articles, even though the manufacture of the articles was itself excepted from infringement; (4) after 17 June 2004, the new s 77A did effect such an exception; (5) both before and after 17 June 2004, the design of the pivot arm component fell within the definition of “corresponding design” and the manufacture of that component did not constitute a three-dimensional infringement of the respondent’s copyright in its drawings.

Copyright Act 1968 (Cth) ss 10(1) (“artistic work”), 31, 32, 36, 74, 77, 77A

Designs Act 1906 (Cth)…

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Details
Case
[2008] FCAFC 33
Decision Date

CaseChat Overview and Summary

The case of Digga Australia Pty Ltd v Norm Engineering Pty Ltd involved a dispute between the two companies regarding alleged copyright infringement in relation to a particular design of an excavating bucket. The Federal Court of Australia was tasked with determining whether Digga had infringed upon Norm's copyright by creating a bucket based on Norm's design. The legal issues that arose in the case included whether there was a causal link between the drawings used by Norm and the manufacture of the infringing bucket, as well as whether the necessary originality existed in the drawings to attract copyright protection.

The court found that there was a causal link between the drawings and the manufacture of the infringing bucket, as Norm's employees had used the drawings to create the bucket. The court also determined that the drawings in question had the requisite originality to attract copyright protection. The court found that the drawings were not merely mechanical reproductions of an earlier work, but rather, they represented an original artistic work. The court further held that the necessary skill and labour to confer originality for copyright purposes was not necessarily excluded when there was a change from one medium to another, such as a drawing of a three-dimensional object.

As a result of the court's decision, Digga was found to have infringed upon Norm's copyright by creating a bucket that was substantially similar to Norm's design. The parties were directed to attempt to agree on the form of orders to be made, including orders as to costs. If the parties were unable to reach an agreement, they were required to provide written submissions in support of the forms of orders they would contend. The decision in this case highlights the importance of protecting original designs and the potential consequences of copyright infringement.

Orders

Orders of the court

1. The parties attempt to agree on the form of the orders to be made (including orders as to costs) to give effect to the Reasons for Judgment published today.

2. By 25 March 2008, the parties provide to the Associate to Lindgren J an agreed form of orders, or, if agreement has not by then been reached, the forms of orders for which they will respectively contend accompanied by written submissions in support.

Background

Background to the litigation

The Designs Act 2003 and the associated amendments to Div 8 commenced on 17 June 2004. It has been necessary to consider the interaction between the copyright and designs legislation in relation to Digga’s conduct both before and after that date.BACKGROUND FACTS In about 1984, a boilermaker and general engineer, Vlada Acimovic, took a standard form of excavating bucket, and, by his own efforts in a workshop, produced a modified bucket that could be opened and closed. The one bucket could perform four operations (it was thus a “4 in 1” bucket). The design of this bucket was not recorded in formal drawings, and no patent or design registration was sought. Mr Acimovic simply commenced manufacturing buckets from notes which he described as “rough or rudimentary”. He said that the notes had long since been disposed of. On 29 March 1988, Mr Acimovic caused Norm to be incorporated. In that year, he transferred his business to Norm. The company was named after his son-in-law, Norman Pesch, an engineer. Mr Pesch said that he started working for Norm in 1989 or 1990. Initially he was a workshop supervisor, but over time he assumed the role of general manager. Mr Pesch was a full-time employee of Norm when he undertook the work referred to below, and that work was done “in pursuance of the terms of his...employment” by Norm: see s 35(6) of the Copyright Act. It was after Norm was incorporated that Mr Acimovic, for the first time, caused drawings to be prepared for his 4 in 1 bucket (the First Plans). A draughtsman who was a full time employee of Norm did the necessary work. The First Plans were hand drawn. In 1988, Mr Acimovic retired from the business. From 1988 to late 2001 or early 2002 Norm manufactured a 4 in 1 bucket in accordance with the First Plans (the Old Norm Bucket). In about 1993, Mr Pesch began converting the First Plans to electronic format using “AutoCAD software”. The acronym “CAD” stands for “computer aided design”. Mr Pesch said that he transferred the First Plans to Norm’s computer system between 1993 and 1997. He said that his aim was not to change the design recorded in the First Plans but just to update and improve Norm’s records by transferring the handwritten drawings to the computer system. His Honour found (at [43]) that Mr Pesch’s act of transferring the First Plans onto Norm’s AutoCAD computer system “did not involve any act of original authorship”. Over time, customers of Norm began to use the 4 in 1 bucket with more powerful machines. This led Norm to take steps in 2001 to modify the design with a view to strengthening the product, in particular, by making the pivot system more resistant to breakage. In 2001, Mr Acimovic returned to Norm’s workshop to help Mr Pesch in this work. Again, Mr Acimovic worked without using drawings. After the design had been modified in this way, drawings that recorded the modified bucket were brought into existence. Other employees of Norm were also involved in this process. Mr Pesch managed the process.

Evidence

Evidence Before The Court

Another submission made by Norm is that, in any event, his Honour was entitled to infer that the September 2003 plans were used to manufacture the New Norm Bucket that was inspected “in circumstances where there has been admitted conscious copying of an article based on a finding of reproduction”. I understand this submission to be based on the proposition that “[i]t is not for the court to make the way of the taker of copyright matter easy”: Blackie & Sons Ltd v The Lothian Book Publishing Co Pty Ltd (1921) 29 CLR 396 at 404 per Starke J. Whatever effect this proposition should be permitted to have on the question of whether the Digga Bucket was objectively similar to the New Norm Bucket, it is irrelevant to the question of a causal link between the Subject Drawings and the particular New Norm Bucket that was inspected.Evidence as to the role of plans in the manufacturing process Senior counsel for Digga referred to the evidence of Mr Pesch that establishes that:· At Norm’s premises, the latest version of the computerised plans were stored “upstairs” in the administration or drafting office and hard copies of the plans were held “downstairs” in the workshop where manufacturing took place;· The computerised plans were resorted to not as a matter of routine, but only in the case of items that were made occasionally. In those cases, a printout would be taken from the computer upstairs. For routine manufacture of standard items, however, the hard copy drawings held downstairs in the workshop were sufficient.Based on this evidence, senior counsel for Digga framed Digga’s submission in the following way:· New Norm Buckets began to be manufactured in March 2002;· His Honour found that plans were used in the process of manufacture of the New Norm Bucket, and so plans were used from March 2002;· Those plans were not the same plans as the plans in suit, which were found not to have been brought into existence until September 2003;· The New Norm Bucket did not change between March 2002 and September 2003, and so there would have been no need to obtain a printout of the new plans from the computer “upstairs”.Therefore, Digga submits, the September 2003 plans were never directly used in the process of manufacture of the buckets, and the necessary causal link was not established.Consideration of the second ground of appeal I agree that his Honour does not expressly address the question whether the particular New Norm Bucket that was inspected by Digga’s employees included three-dimensional reproductions of the Subject Drawings. However, while his Honour did not say expressly that that the relevant components of that particular New Norm Bucket were made in accordance with the Subject Drawings that were created on 18 September 2003, he was careful to recount (at [178] - [180]) the facts concerning the relationship between the New Norm Bucket that was inspected and the date 18 September 2003. Working backwards, his Honour said that Digga sold its first bucket on 2 December 2003 and that that 4 in 1 bucket must have been manufactured on 30 November, 1 December or possibly 2 December 2003. Then his Honour discussed the evidence as to the timing of Digga’s inspection of the New Norm Bucket. Various witnesses estimated the timing as “October or November 2003”, “some months before Digga sold its 4 in 1 bucket” and “late 2003”. His Honour then placed the preparation of the Digga Drawings as having occurred towards the “middle to the end of November 2003”. His Honour thought it “very likely” that the particular New Norm Bucket was inspected in “late October or November 2003”.

Decision

Reasons for decision

LINDGREN, BENNETT AND LOGAN JJ
Therefore, in relation to the period on and from 17 June 2004 also, Digga’s appeal succeeds in relation to three-dimensional reproduction within the Digga Bucket of Norm’s drawing of the Pivot Arms.CONCLUSION Digga has failed on the first and second grounds of appeal and has succeeded in part on the third and fourth grounds of appeal. The parties should have the opportunity to agree on the form of orders to be made, including orders as to costs. There should be directions accordingly. I agree with the conclusions reached by Lindgren J and the reasons for those conclusions. I also agree with the directions proposed by his Honour. I have had the privilege of reading in draft the reasons for judgment intended to be published by Lindgren J. I agree with his Honour’s reasons and with the directions proposed by him.

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN, BENNETT AND LOGAN JJ

The following principles of law were, it appeared, not controversial on the appeal:· The necessary skill and labour to confer originality for copyright purposes is not necessarily excluded where there is change from one medium to another, for example, a drawing of a three-dimensional object, such as a prototype: see L B (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 at 568-569; Interlego AG v Tyco Industries Inc [1989] AC 217 (Interlego) at 263; Swarbrick v Burge (2004) 208 ALR 19 at [138] – [140]; Garnett K, Gillian D and Garbottle G, Copinger and Skone James on Copyright (15th ed, Sweet & Maxwell, London, 2005) (Copinger) vol 1 at [3–135].· The owner of copyright in an original artistic work does not, simply by mechanically reproducing it, create a further original artistic work attracting copyright protection: The Reject Shop Plc v Robert Manners [1995] FSR 870 (The Reject Shop). If the position were otherwise, the way would be open for the copyright owner to “re-start” the period of copyright protection, and, indeed, to do so many times: see Interlego at 255-256, 263, 268.· Where a copyright owner makes a mere a mere mechanical reproduction of the copyright work, the copy will not itself be an original work attracting copyright protection, but it may be seen to enjoy vicariously the benefits of the copyright protection attached to the earlier work, although only for the duration of that copyright, and only, of course, if remedies are still available in respect of that copyright: Copinger vol 1 at [3-134]; and see Interlego at 268; Biotrading & Financing OY v Biohit Ltd [1996] FSR 393 at 395-396; Biotrading & Financing OY v Biohit Ltd [1998] FSR 109 at 116-117.· Whether successive revisions of an earlier original work will attract independent copyright protection depends on whether they have the requisite quality of originality over and above that of the earlier original work or earlier original revision: Interlego at 263; Interlego AG V Croner Trading Pty Ltd (1992) 39 FCR 348 at 378-379 per Gummow J; C&H Engineering v F Klucznik & Son Ltd (1992) 26 IPR 133 at 139.· Where the author of a drawing makes preliminary drawings before producing the final version, the final version is not denied originality merely because it was preceded by the preliminary drawings: L A Gear Inc v Hi-Tec Sports Plc [1992] FSR 121 at 136; Biotrading & Financing OY v Biohit Ltd [1998] FSR 109 at 116-117; Copinger vol 1 at [3-133]-[3-134].Consideration of the first ground of appeal Digga relies on The Reject Shop. In that case the respondent brought criminal proceedings against the appellant for dealing in tins, notebooks, photographic albums and other items that bore copies of designs created by the respondent in the form of handmade decorative tiles. In order to produce the design for the tiles, the respondent had produced a drawing, photocopied it and enlarged the photocopy by 10%. That “final image” was then glued onto a laminate and cut around with a saw. A base plate was then added to produce a template from which the tiles were manufactured.