Heritage Profiles Pty Ltd v Warringah Timbers Pty Ltd

[1997] FCA 430

CATCHWORDS

PRACTICE AND PROCEDURE ‑ whether claims of breach of copyright, passing off and misleading and deceptive conduct under the Trade Practices Act 1974 and the Fair Trading Act 1987 (NSW) should be struck out or dismissed - whether claims manifestly groundless

Trade Practices Act 1974
Fair Trading Act 1987 (NSW)
Copyright Act 1968

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.
Kenrick & Co v Lawrence & Co (1890) 25 QBD 99
G A Cramp & Sons Ltd v Frank Symthson Ltd [1944] AC 329
Donoghue v Allied Newspapers Ltd [1938] 1 Ch 106
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 124 CLR 685
Murex Diagnostics Australia Pty Ltd v Chiron Corporation (1995) 128 ALR 525
Dey v Victorian Railways Commissioners (1949) 78 CLR 62

HERITAGE PROFILES PTY LIMITED v WARRINGAH TIMBERS PTY LIMITED & ORS

No. NG 1022 of 1996

CORAM:      Lehane J
PLACE:         Sydney
DATE:           23 May 1997

IN THE FEDERAL COURT OF AUSTRALIA           )
NEW SOUTH WALES DISTRICT REGISTRY         )             No. NG 1022 of 1996
GENERAL DIVISION  )

BETWEEN:                HERITAGE PROFILES PTY LIMITED
  Applicant

AND:  WARRINGAH TIMBERS PTY LIMITED
  (A.C.N. 001 767 880)
  First Respondent

GEORGE SAVIOUR ZAMMIT
Second Respondent

MICHAEL FRANCIS BOURKE
Third Respondent

CORAM:  Lehane J
PLACE:     Sydney
DATE:      23 May 1997

MINUTE OF ORDERS

THE COURT ORDERS THAT:

1. The motion is dismissed with costs.

NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA           )
NEW SOUTH WALES DISTRICT REGISTRY         )             No. NG 1022 of 1996
GENERAL DIVISION  )

BETWEEN:                HERITAGE PROFILES PTY LIMITED
  Applicant

AND:  WARRINGAH TIMBERS PTY LIMITED
  (A.C.N. 001 767 880)
  First Respondent

GEORGE SAVIOUR ZAMMIT
Second Respondent

MICHAEL FRANCIS BOURKE
Third Respondent

CORAM:  Lehane J
PLACE:     Sydney

DATE:      23 May 1997

REASONS FOR JUDGMENT

LEHANE J:

This is a motion by which the respondents seek, presumably in the alternative, an order under O 11 r 16 of the Federal Court Rules “striking out the whole of the pleadings in this matter” (or, alternatively, “striking out each of the pleadings in this matter”) and an order under O 20 r 2 “staying or dismissing generally these proceedings” (or “staying or dismissing each claim for relief in these proceedings”).  The applicant (Heritage) and the first respondent (Warringah) both make products such as skirting boards, architraves and picture rails.  Heritage makes its products in medium density fibreboard (MDF); Warringah uses both MDF and timber.  The second and third respondents are directors and shareholders of Warringah.  Heritage is a wholesaler; until relatively recently Warringah, which sells by retail, was a customer of Heritage.  These proceedings arise out of the publication by Warringah of a catalogue of its products, a number of which are clearly very similar to the products of Heritage.

The statement of claim

Heritage pleads its claim in passing off, under the Trade Practices Act 1974 and the Fair Trading Act 1987 (NSW) and in copyright. The basis of the passing off claim is that by reason of its marketing and promoting of what it calls the “Heritage Range” and its mouldings throughout Australia since 1991 by means of catalogues illustrating the moulding, Heritage has acquired a substantial reputation and goodwill in its range of products and in mouldings made of MDF promoted by means of illustrations in its catalogues or substantially identical or deceptively similar illustrations. Consequently, it pleads that the promotion of MDF mouldings by reference to illustrations substantially identical with, or deceptively similar to, those in Heritage’s current catalogue (Heritage’s catalogue) signifies or is likely to signify that those mouldings are Heritage mouldings, are supplied or made by, or with the approval or sponsorship of, Heritage, are supplied or offered for sale by a company which is associated or affiliated with, or otherwise connected with, Heritage or have a connection in trade with Heritage. It is then pleaded that Warringah has advertised, sold etc MDF mouldings by reference to a catalogue containing illustrations of Warringah’s mouldings (Warringah’s catalogue); that Warringah’s mouldings are substantially identical with or deceptively similar to those of Heritage and are supplied by means of or by reference to, illustrations in a catalogue which are substantially identical with or deceptively similar to those in Heritage’s catalogue. It is said, then, that at the time it commenced promoting, selling etc those mouldings Warringah had no reputation or goodwill in such mouldings (something has gone wrong with the grammar of paragraph 11 of the statement of claim, which deals with this matter, but that is of no importance for present purposes). Consequently, it is said, members of the public have been, or are likely to be, misled or deceived into thinking that Warringah’s mouldings are those of Heritage, are supplied or made by Heritage, or with its sponsorship or approval, are supplied or sold by a company connected with Heritage or have a connection in trade with Heritage. It is said, finally, that the MDF mouldings (presumably Warringah’s) and the illustrations in Warringah’s catalogue were adopted by the respondents with the intention of appropriating or taking advantage of Heritage’s reputation and goodwill.

Those same allegations found the claim under the Trade Practices Act and the Fair Trading Act.  Additionally, it is alleged that Warringah, in trade or commerce in connection with the supply or possible supply of goods or services or in connection with the promotion of the supply or use of goods or services, has (again there is a misprint in the statement of claim) falsely represented that its mouldings are of a particular standard or quality or are supplied or made by, or have the sponsorship of, Heritage.  Heritage claims to have suffered loss by reason of the alleged infringement of the Trade Practices Act and the Fair Trading Act and passing off.

The claim in copyright is quite straightforward.  It is that each of the illustrations in Heritage’s catalogue was created by its employees and is an original artistic work in which copyright subsists, and that the catalogue containing the illustrations is, as a compilation, an original artistic and literary work in which copyright also subsists.  It is pleaded that Warringah infringed Heritage’s copyright by reproducing, in its own catalogue, without the licence or authority of Heritage, a number of the illustrations from the Heritage catalogue and that this has resulted in loss and damage to Heritage.

As for the second and third respondents, it is said that they have aided, abetted, counselled or procured the statutory contraventions or were knowingly concerned in them: they knew, it is pleaded, that Heritage manufactured and supplied its products by reference to its catalogue, that Warringah had no goodwill or reputation in the MDF mouldings or the illustrations in Heritage’s catalogue and they caused Warringah to market Warringah’s mouldings by reference to the illustrations in Heritage’s catalogue and to produce Warringah’s own catalogue.  Finally, as to copyright, it is pleaded that the second and third respondents caused or authorised the reproduction, without the licence or authority of Heritage, of the illustrations in Heritage’s catalogue and of a substantial part of that catalogue.

The motion

It was not suggested that the statement of claim did not adequately plead the causes of action on which Heritage relies.  The essence of Warringah’s case on the motions is that, having regard to affidavit evidence on which Warringah relied, the court should conclude that Heritage’s claims could not succeed and should therefore be summarily dismissed as oppressive, vexatious or frivolous.  Warringah and its directors should not, it was said, be put to the trouble and expense which would result from allowing Heritage’s claims to go to trial.

The material on which Warringah relied included its own catalogue and Heritage’s catalogue and evidence tending to show that products of the kind in question have been made for many years by several manufacturers; that the products of one manufacturer are substantially indistinguishable from that of others; that accordingly no one manufacturer can claim any particular reputation or goodwill in relation to the products; and that the drawings in the catalogues (both Heritage’s and Warringah’s) were simply, in effect, tracings of particular examples of those products.

Counsel for Warringah read also evidence as to the way in which the drawings reproduced in Warringah’s catalogue were made and that catalogue compiled.  As counsel conceded, however, that there was a substantial question to be tried in relation to those matters, it is unnecessary to consider that evidence further.

The evidence on which Warringah relies includes catalogues produced by a number of manufacturers of mouldings of the same general sort as those sold by Heritage and Warringah.  The evidence of the second respondent, Mr Zammit, was that each of those catalogues had been in circulation for some years.  The oldest of them is dated September 1934.  Certainly it appears, as one might expect, that mouldings of a generally similar appearance to those produced by the parties are made and sold by a number of companies.  All the catalogues (other than those of Heritage and Warringah) describe mouldings made of timber, not MDF which is the material of which Heritage makes all its mouldings: but Heritage does not claim any exclusive rights in relation to MDF or mouldings made from it.  Mr Zammit gave evidence also that he had sold wooden mouldings for many years and had noticed that certain “traditional” mouldings were the most popular.  Those “traditional” mouldings, he says, are those which have been predominantly produced both by Warringah and other producers of mouldings, and it is those “traditional mouldings” which, he says, Warringah’s catalogue predominantly illustrates: the market comprises not only those who wish to put new mouldings into premises but, in a large number of cases, those who wish to match existing mouldings.  Mr Zammit deposes to a conversation which he claims to have had with Mr Reinhold, the managing director of Heritage, in which (Mr Zammit says) Mr Reinhold conceded that he formulated Heritage’s catalogue from samples of mouldings which had been in existence for years and had been brought in by customers requesting replacements.  That version of the conversation is supported by an affidavit of Mr J F Wood, but Mr Reinhold gives a different version which does not include that alleged statement.  Clearly I should not attempt to resolve, on the motion, the factual issue thus arising and the evidence of the conversation must, for present purposes, be disregarded.

Warringah relies also on differences between Heritage’s catalogue and Warringah’s catalogue, particularly the cover and the first page of each.  The covers are indeed quite different: on the Heritage cover there appear a series of mouldings and on the Warringah cover a picture of a somewhat ornately decorated room.  The words on the covers are also significantly different.  Those on the Heritage cover are:

HERITAGE

·SKIRTING

·ARCHITRAVES

·PICTURE RAILS

·CHAIR RAILS

IN MDF

(MEDIUM DENSITY FIBREBOARD)

MOISTURE RESISTANT

Those appearing above the picture on the cover of Warringah’s catalogue are:

FEDERATION &
CONTEMPORARY

IN MOISTURE RESISTANT MEDIUM DENSITY
FIBRE BOARD & SOLID TIMBERS

On the left side of the picture there appear the words: “Quality & Service at Competitive Prices” and, to the right of the picture, “Large Range of Mouldings in Stock”.  Similarly, the first page of each catalogue is significantly different from the first page of the other: each refers by name to the maker of the mouldings illustrated in the catalogue: in the case of Heritage, “created by Heritage Profiles Pty. Ltd.” in the case of Warringah, “Milled by Warringah Timbers”.  In short, Warringah says, these are standard products, the like of which have been readily available for many years; the catalogues are significantly different; no one could be misled into believing that Warringah’s products were those of Heritage or that there was any association or connection between the manufacturers of the two sets of products.  The case is thus, Warringah says, a fortiori Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.

On the question of copyright, Warringah submits that there cannot be copyright in any of the individual drawings.  They are simply (it says) direct copies, or tracings, from the original mouldings.  I was referred to Kenrick & Co v Lawrence & Co (1890) 25 QBD 99, G A Cramp & Sons Ltd v Frank Symthson Ltd [1944] AC 329 and Donoghue v Allied Newspapers Ltd [1938] 1 Ch 106. On the issue of copyright in the catalogue as a compilation, Warringah’s submissions, as I understood them, were to the effect that even if such copyright exists it is plainly not infringed because it is evident that no part of Warringah’s catalogue substantially reproduces any part of Heritage’s catalogue.

It is not necessary to refer at length to the well known authorities for the proposition that the Court will strike out a pleading or summarily dismiss proceeding only in a very clear case.  I was referred to General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and to the observations of Sheppard J in Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 124 CLR 685 at 695 and of Burchett J in Murex Diagnostics Australia Pty Ltd v Chiron Corporation (1995) 128 ALR 525 at 533. The remarks of Dixon J in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91, though in a judgment which was in part dissenting and with reference to the inherent jurisdiction of the Court “to stop the abuse of its process when it is employed for groundless claims” were quoted with approval in General Steel at 129, and are, I think, apposite to the present case:

The principles upon which that jurisdiction is exercisable are well settled.  A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury.  The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abusive process or is vexatious.  But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and abusive of process.

The evidence and submissions on the motion must be considered with those principles in mind.  It is convenient to begin with the copyright issues.  There follow reproductions of page 3 of Heritage’s catalogue, and then the first full page of illustrations (headed “selected mouldings” in Warringah’s catalogue).

HERITAGE’S CATALOGUE
Page 3

WARRINGAH’S CATALOGUE
Page 1

An obvious difference between the way in which the illustrations are presented in each catalogue is that whereas in Heritage’s catalogue the illustrations are vertical, in Warringah’s catalogue they are (if one uses the vertical as one’s starting point) rotated somewhat more than 45°.  Disregarding that, and the smaller scale of the illustrations in Warringah’s catalogue, the way in which the mouldings are drawn appears to be the same.  In each case what is shown is a profile of the moulding.  The other catalogues in evidence illustrate the obvious truth that that is by no means the only way in which it is possible to depict mouldings of this kind.  Secondly, it will be noticed (as Heritage claims), that there is apparently no significant difference between what Heritage’s catalogue calls “Windsor” and Warringah’s catalogue calls “WAT 2” or between “Kendall” in Heritage’s catalogue and “WAT 3” in Warringah’s catalogue.  In each case, also, Warringah offers the moulding in the same range of sizes as Heritage does.  The correspondences to which I have drawn attention are to be found between each of the first 24 mouldings illustrated in Heritage’s catalogue and (in the same order) each of the first 24 mouldings illustrated in Warringah’s catalogue.  There are similar correspondences between other items in each of the catalogues.

It will be recalled that Heritage claims that it is the owner of copyright subsisting in each of the illustrations in its catalogue, as an artistic work, and in the catalogue itself as a compilation of artistic and literary works.  The authorities to which Warringah referred me are of respectable antiquity and have, in significant respects, been superseded by more recent legislation, in Australia the Copyright Act 1968. The definition of “artistic work” in subs 10(1) of that Act includes a drawing, whether the work is of artistic quality or not. Nor, in my opinion, can there be any doubt that a catalogue such as Heritage’s catalogue or Warringah’s catalogue can be, as a “compilation”, a literary work as defined in the Copyright Act.  I have mentioned counsel’s concession that there is a factual issue to be tried as to whether Warringah actually copied illustrations in Heritage’s catalogue.  No substantial argument was offered to support a proposition that, if copying of the illustrations be assumed, there has nevertheless been no reproduction or adaptation of a substantial part of the work.  Certainly it is by no means self evident that such a proposition must be correct.  It follows inevitably, in my view, that in relation to copyright it cannot be said that Heritage’s claim is manifesting groundless.  It is unnecessary to pursue the matter further because that conclusion is sufficient to require that the motion should fail as to the claims based on copyright.

As for the statutory claims and those in passing off, Warringah has pointed to some matters that have weight, particularly the substantial differences between the covers and first pages of the two catalogues.  Additionally, of course, it is clear that, in the absence of a statutory monopoly, the mere copying and selling of an article on the market is not a legal wrong: Parkdale at 220, 221 per Brennan J.  Nevertheless, I do not think it is possible for me to conclude, where the principal proceeding has reached the stage only of the filing and service of the statement of claim, that Heritage’s claims in passing off, and under the statutes, are hopeless (I put the matter that way simply for the purpose of applying the correct test: it is not possible for me to express a view, and I express no view, as to the substantial merits of the claims).  It is to be remembered, after all, that Parkdale was an appeal following a final hearing.  It was founded on particular findings of fact arising from particular evidence.  A different conclusion might have been reached, had there been stronger evidence that members of the public were actually deceived or misled, or more specific evidence as to the practices of retailers: see particularly per Mason J at 210, 211.  On this aspect of the case, too, the similarities between the drawings, their ordering in the catalogues and the sizes in which the products are said to be available may be relevant.  In short, because Warringah has not made good a proposition that the statement of claim does not sufficiently plead the causes of action on which Heritage relies and has not established that, on the basis of the statement of claim and the evidence relied on by Warringah, Heritage must necessarily fail, the motion, so far as Warringah is concerned, must fail.  It was not suggested to me that, if Warringah failed on the motion, the claims against Mr Zammit, the second respondent, should either be struck out or be dismissed.  It was suggested that the claims against the third respondent, Mr Bourke, should be struck out or dismissed.  But there is no evidence at all as to Mr Bourke’s position: it was not suggested that the pleading is defective so far as it deals with the claims against him.  In the absence of any relevant evidence at all, I cannot hold that Heritage’s claims against Mr Bourke must necessarily fail.

Conclusion

Accordingly, the motion must be dismissed.  Although no reason occurs to me why it should not be dismissed with costs, I have not heard argument on the question of costs and I shall hear counsel if they wish to make submissions on that question.

I certify that this and the preceding 13 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lehane.

Associate:

Dated:23 May 1997

Heard:  13 May 1997

Place:  Sydney

Decision:23 May 1997

Appearances:  J R Baird of counsel instructed by Bennett Stewart & Shirvington appeared for the applicant

G M Thomas of counsel instructed by Michael Clarke & Associates appeared for the respondent.