Interlego AG v Croner Trading Pty Ltd

[1992] FCA 992

IN THE ~EDERAL COURT OF AUSTRALIA )

NEW SOUTH WJALES DISTRICT REGISTRY )	NO. NG 350 of 1991
GENERAL. DIVISION	1

On appeal from a Judge of the

Federal Court of Australia.

BETWEEN:  INTERLEGO AG

First ADDellant

(First Cgoss-~es~ondent)

LEG0 AUSTRALIA PTY LIMITED

Second Appellant

(Second Cross-Respondent)

AND :  CRONER TRADING PTY LIMITED

Respondent

- . -. .. . .

corn : BLACK CJ, LOCKHART, GUMMOW JJ

PLACE :	SYDNEY
DATE :	16 DECEMBER 1992

CORRIGENDUM

Gummow J. The following amendment should be made to the Judgment of follows :

1 February 1993.

"There is some force in these arguments. However, what

was essentially . , . on that exact issue:"

Mark Leeming ( ) ,

Associate to gumm mow J.

94a,19qa

JUDGMENT No. .O, " . . . . . ." . - * e l a w w w r

CATCHWORDS

INTELLECTUAL PROPERTY - copyright - drawings made before commencement of Copyright Act 1968 - whether copyright subsists - whether drawings constituted designs "capable of being registered" - Co~vriaht Act 1968, s 218 - Desicms Act

1906, ss 4, 17.

INTELLECTUAL PROPERTY - drawings of toy bricks - modifications made after commencement of Co~vricrht Act 1968 to reflect changes in manufacturing process - whether modified drawings are original works in which copyright subsists - whether defence available under s ' 7 7 of Co~vriqht Act 1968 in respect of activities before and after Co~vriaht (Amendment) Act 1989

- "overlap" between copyright and designs law - "function" in

designs law.

CONSUMER PROTECTION - toy bricks - get up - whether passing off - whether sold as compatible and interchangeable with bricks of other manufacturer - whether misrepresentation that bricks will work with the bricks of other manufacturer - Trade Practices Act 1974, ss. 52,53.

EVIDENCE - survey evidence - admissibility - weight - attempted use to prove indirectly that for which testimonial evidence would be inadmissible - Federal Court Rules 0 33 r 3.

CoDvrlght Act 1905

Co~vrlaht Act 1912

Copvrraht Act 1968
Co~vrlaht (Amendment) Act 1989
Deslans Act 1906

Designs Act 1912

~esians (Amendment) Act 1981

Trade Practices Act 1964

Acts Inter~retation Act 1901

Kinq Features Syndicate Inc v 0 & M Kleeman Ltd (1941) 58 RPC 207

Mallevs v J W Tomlln Ptv Ltd (1961) 35 ALJR 352

G F Heublern & Bro Inc v Continental Liqueurs Ptv Ltd (1962) 109 CLR
G E Trademark 119731 RPC 297

Kelvlacat Ptv Ltd v Trailcraft Marine Ptv Ltd (1987) 79 ALR 534
Interleao AG v Tvco Industrres Inc [l9891 AC 217
Rose Plastics GmbH v Wlllram Beckett & CO (Plastics) Ltd [l9891 FSR 1
Arnotts Ltd V Trade Practices Commrssion (1990) 24 FCR 313
Hosokawa Mlcron International Inc v Fortune (1990) 26 FCR 393

Reckrtt & Colman Products Ltd v Borden Inc (19901 RPC 341

INTERLEGO AG & LEG0 AUSTRALIA PTY LTD v CRONER TRADING PTY LTD

NG 350 of 1991

CORAM:	BLACK CJ, LOCKHART & GUMMOW JJ
PLACE :	SYDNEY
DATE :	16 DECEMBER 1992

PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY	) NO. NG 350 of 1991
1
GENERAL DIVISION	1

ON APPEAL FROM A JUDGE

OF THE FEDERAL COURT OF AUSTWIA

BETWEEN:  INTERLEGO AG

F i r s t A p p e l l a n t

(First Cross-Respondent)

LEGO AUSTRALIA PTY LTD

Second Appellant

(Second Cross-Respondent)

AND:  CRONER TRADING PTY LTD

Respondent

(Cross-Appellant)

CORAM:	BLACK CJ, LOCKKART,GUMMOW JJ
PLACE :	SYDNEY
DATE :	16 DECEMBER 1992

MINUTE OF ORDERS

THE COURT ORDERS THAT:-

1.    Order 1 made by Sheppard J on 14 June 1991 be set aside.

2.  The respondent by itself its servants and agents be restrained from importing, selling or advertising or offering for sale toy blocks or bricks which reproduce in a three dimensional form the drawings identified in para 21 of the Further Amended Defence filed 14 March 1990 as "the post-1969 Drawings" ("the post-1969 Drawings") or any of them.

3.    The operation of order 2 be suspended until and subject to the disposition by Sheppard J, or another Judge of the Court, of the re-opening

1. - .

I .l by the respondent of its case pursuant to Order

, .

. ' 5

.L 4 of these orders.

4.  The respondent have leave to re-open its case before Sheppard J, or another Judge of the Court, to tender evidence to show sales by the appellants and related corporations in Australia since 1 October 1990 of articles made by application of corresponding designs in relation to the post-1969 Drawings and to establish before the primary Judge the existence of a defence under s 77 of the Copvriaht Act 1968, as inserted by the Copyriqht (Amendment) Act 1989.

5.  The appeal stand over for such further consideration of orders 2 and 3 as may be necessary or appropriate a£ ter the implementation of order 4, and with liberty to restore on 21 days written notice.

6.  Otherwise the appeal and the cross appeal be dismissed.

7.    The appellants pay the costs to date (including any reserved costs) of the appeal and cross appeal.

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 350 of 1991
GENERAL DMSION

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN :  INTERLEGO AG

First Appellant/First Cross

Respondent

LEG0 AUSTRALIA F'TY LIMITED

Second Appellant/Second Cross

Respondent

AND:  CRONER TRADING PT"I' LIMITED

Respondent/Cross Appellant

COURT:	BLACK CJ, LOCKHART and GUMMOW JJ
D A m	16 December 1992
PLACE:	Sydney

REASONS FOR JUDGMENT

BLACK CI:

-

A ~ g e c : fflth tne reasons ror jucigment oi Gunimow J ana the orders that ius

Honour proposes. I also agree with the observations made by Lockhart J.

I certify that this is a true copy of

the reasons for judgment herein of the Honourable Chief Justice

Associate: W Date: 16 December 199i

IN THE FEDERAL COURT OF AUSTRALIA )

1

NEW SOUTH WALES DISTRICT REGISTRY ) No. G350 of 1991

1

GENERAL DIVISION 1

ON APPEAL FROM A JUDGE OF THE

FEDERAL COURT OF AUSTRALIA

BETWEEN:  INTERLEGO AG

First Appellant/First

Cross Respondent

LEG0 AUSTRALIA PTY LIMITED

SecondAppellant/Second

Cross Respondent

AND :  CRONER TRADING PTY LIMITED

Respondent/Cross

Appellant

COURT :	Black C.J., Lockhart and Gummow JJ.
DATE :	16 December 1992
PLACE :	Sydney

REASONS FOR JUDGMENT

LOCKHART J.

I have had the benefit of reading the reasons for judgment of Gummow J. in draft form. I agree with them and with the
orders which his Honour proposes.	I shall add some observations

of my own on the question which is central to this appeal.

The case in relation to copyright turns on the proper construction of S. 218(2) of the Copyright A c t 1968 ("the Act") which provides:

"218(2) Copyright does n o t s u b s i s t by

v i r t u e o f t h i s A c t i n an a r t i s t i c work made

before the commencement of this Act which, at the time when the work was made, constituted a design capable of being registered under the Designs Act 1906, or under that Act as amended and in force at that time, and was used, or :intended to be used, as a model or pattern to be multiplied by an industrial process."

The principal question in the appeal is whether the words ". . .

design capable of being registered under the Designs Act 1906

. . . " means, as the appellants submit, a design which must satisfy

the requirements of registration including the requirement that it be new or original, or, as the respondent submits, a design within the meaning of the Designs Act 1906.

The argument of the appellants proceeded on the assumption that these words, according to their ordinary and natural

meaning, are consistent only with the construction for which they

contended, an approach assumed in a number of the cases to which

reference was made in argument. Those cases include Edwards Hot

I

Water Systems v S W Hart & CO Pty Limited (1983) 49 ALR 605 per

Franki J. at 632; Kolozsy v Biro [l9711 2 NSWLR 444 (Hope J.)

each judgment reflecting the approach taken by Eve J. in

Stephenson, Blake & CO Limited v Grant Legros & CO Limited (1916)

33 RPC 416 (a decision which has attracted considerable criticism by learned writers; see for example Laddie Prescott and Victoria: The Hodern Law of Copyright 1980, para. 3.71 N4; Blanco White: Patents for Inventions 1974, para. 8-305; Lahore: Intellectual Propertyin Australia 1977, 283 and Cornish Intellectual Property 1981, 413). This same view of the literal construction of the

words appealed also to the learned primary Judge.

In my opinion the phrase is open to either construction. According to its literal, ordinary and natural meaning it is susceptible of the construction for which the respondent contends that the subject matter of.the application for registration is "capable of registration under the Designs Act 1906" if at the time it was made it possessed those essential characteristics which qualify it as a design within the meaning of the designs legislation notwithstanding that there is no right to compel registration because the design lacked novelty as required by the

1906 Act.

The question is one of construction; it must, however, be resolved, not merely by reference to the literal meaning of the language used by the legislature, but by reference to the legislative context in which it appears, the history of the Act and the purpose which it was intended to achieve as gleaned from

the Act and its predecessors.

The proper construction of the phrase has excited much discussion in the courts and among learned authors of textbooks and writers of articles. The view for which the appellants contend was favoured by Eve J. in Stephenson, Blake but is contrary to a consistent body of opinion, some of high authority in Australia, the United Kingdom, Canada, Hong Kong and Israel.

In Australia, French J. decided in Xevlacat Pty Limited v

Trailcraft Marine Pty Limited ( 1987) 79 ALR 534 that Stephenson,

Blake should not be followed and that the decisions to the contrary (to which his Honour referred) were to be preferred. Pincus J. referred to Kevlacat with approval in Greenfield

Products Pty Limited v Rover-Scott Bonnar Limited (1990) 95 ALR

275 at 288-9. In the United Kingdom the construction for which the appellants contend was rejected by Whitford J. in Interlego AG v Alex Folley (Vic) Pty Limited [l9871 FSR 283. See also

Usher v Barlow (1952)	69 RPC 27; [l9521 Ch 255 and Pytram Limited
v Models (Leicester) Limited [l9301 1 Ch 639.	The construction

for which the appellants contend was rejected by the Hong Kong Court of Appeal in Interlego AG v Tyco Inc [l9871 FSR 409 and on appeal to the Privy Council by their Lordships in Interlego AG v Tyco Industries Inc [l9891 AC 217. In Canada the Canadian Federal Court of Appeal rejected the argument for which the appellants contend in Bayliner Marine Corporation v Doral Boats Limited [l9871 FSR 497, in particular the judgment of Mahoney J. at 503.

As was pointed out in the Canadian case of Bayliner and by Whitford J. in Interlego v Alex Folley by the Court of Appeal of Hong Kong and the Privy Council in Interlego, to hold that the reference in the relevant designs legislation to a design being "capable of being registered" means registrable as distinct from a design which complies with the criteria to qualify as a "design" within the meaning of the designs legislation, involves the absurdity that a design drawing sufficiently novel to be

e n t i t l e d t o r eg i s t r a t ion f o r t h e maximum period ( f i f t e e n years under the 1906 A c t (Cth) (S. 2 6 ) ) would be excluded from copyright protection, whi ls t a design drawing lacking novelty would be e n t i t l e d t o copyright protection f o r t he f u l l period of t he l i f e of t he author plus f i f t y years. This absurdity is very

much a t t h e hear t of t he jud ic ia l differences of opinion and has

excited much a t t en t ion from learned w r i t e r s .

If more than one in te rpre ta t ion of a s t a t u t e i s reasonably

open, the construction which is t o be preferred is the one which avoids absurdity and inconsistency. Barwick C.J . s a id i n Tickle Industr ies P t y Limited v Hann [l9741 2 ALR a t 289:

" I t is .. . a sound r u l e o f s t a t u t o r y construction tha t a meaning of the language employed by the l e g i s l a t u r e which would

produce an unjust o r capricious r e s u l t is t o	be avoided. Unless the s t a t u t o r y language
is in t rac tab le , an in tent ion t o produce by
its l eg i s l a t ion an unjust o r capricious
r e s u l t should not be a t t r ibu ted t o the
l eg i s l a tu re . "

There a r e many statements t o the same e f f e c t and they a re but

var ia t ions of t he famous statement of t he r u l e provided by Lord

Wensleydale i n G r e y v Pearson (1856) 6 HLC 106:

". . . the grammatical and ordinary sense of

the word is t o be adhered to, u n l e s s t h a t

would lead t o some absurdity, o r some repugnance o r inconsistency with the rest of the instrument, i n which case the grammatical and ordinary sense of t he word

may be modified, s o a s t o avoid the

absurdity and inconsistency, but no

farther. "

This passage was c i t e d with approval by Higgins J . i n The

Australian Boot Trade Employees's Federation v Whybrow & CO	t~
(1910) 11 CLR a t 341 and was referred t o by Isaacs J . i n The
I
Australasian Temperance and General Mutual Life Assurance Society	i !
Limited v Howe (1922) 31 CLR 290 a t 302 .
i'
l

I c e r t i f y that t h i s and the

preceding f i v e ( 5 ) pages are a true copy of the reasons for judgment herein of the Honourable

Mr. Justice Lockhart.

Associate L& F

Dated: 16 December 1

IN THE FEDERAL COURT CIF AUSTRALIA )

m)	No. NG 350 of 1991
GENERAL DIVISION	1

On appeal from a Judge of the

Federal Court of Australia.

BETWEEN:  INTEFGEGO AG

First Appellant

(First Cross-Respondent)

LEG0 AUSTRALIA PTY LIMITED

Second Appellant

(Second Cross-Respondent)

CRONER TRADING PTY LIMITED

Respondent

(Cross-Appellant)

CORAM :	BLACK CJ, LOCKHART, GUMMOW JJ
PLACE :	SYDNEY
DATE :	16 DECEMBER 1992

PEASONS FOR JUDGMENT

GUMMOW J: 

Introduction 

This is an appeal and cross-appeal from the orders of a Judge of this Court (Sheppard J) in an action presenting issues of copyright infringement, passing-off and contravention of ss. 52 and 53 of the Trade Practices Act 1974 ("the TP Act"). The judgment of the primary Judge is reported, (1991) 102 ALR 379. The proceeding was instituted

early in 1990. The relief sought by the appellants included

damages and declaratory and injunctive relief.

The respondent ("Croner") has imported and sold in

Australia products manufactured by a United States toy

manufacturer, Tyco Industries Inc ("Tyco"). The Tyco products

compete with toy blocks or bricks marketed in Australia and elsewhere for many years under the names "Lego" and "Duplo". The first appellant ("Interlego") is a Swiss corporation and a member of the Lego group of companies. It holds the intellectual property rights for the Lego group in Australia and elsewhere. The second appellant ("Lego Australia") is a company incorporated in New South Wales and is the sole authorised distributor in this country of the plastic toy building sets of the Lego group.

I turn first to the copyright issues, many of which
concern the "overlap" between copyright and design law in

respect of artistic works made before and after the

commencement of the co~vriuht Act 1968 ("the 1968 Actn). They

also include issues as to "originality" in relation to

artistic works and "function" in relation to designs.

Gomiaht in re-1969 Drawinqs

The appellants contend (as they contended unsuccessfully before the primary Judge) that the importation and sale by Croner of the Tyco products contravenes ss. 37 and 38 of the 1968 Act. They base this claim upon copyright owned by Interlego in certain artistic works, being design drawings which allegedly have been reproduced in a material form in the

I

production of the Tyco product. Sub-section 21(3) of the 1968 I ..
I

Act provides that for the purposes of that statute an artistic work shall be deemed to have been produced, in the case of a work in a two dimensional form, if a version of the work is produced in a three dimensional form.	i
i ~
A drawing vital to the appellant's case is that described as Drawing No. 5, dated 4 March 1968. Other crucial drawings were made later, after the commencement of the 1968 Act. Drawing No. 5 is a drawing for what was described as the "third generation" 2 X 4 Lego brick. The basic drawings for the "first generation" brick were made in the United Kingdom in 1946 by Mr Hilary Page and Mr F C H Huggins and any copyright therein was later assigned to Interlego. The author of Drawing No. 5, Ellen Jensen, was a Danish national. Toy bricks manufactured pursuant to Drawing No. 5 were first offered for sale in Denmark shortly after the making of the	, .
drawing.
By Order in Council made 14 March 1923, the Governor- General (in pursuance of powers conferred by sub-S. 30(2) of	i
I
I '
the Co~vriaht Act 1911 (Imp) ("the 1911 Act")) applied the
!
~opvriqht	Act 1912 ("the 1912 Act") to works first produced or

i'

published in, inter U,	Denmark. That Order in Council was	i
!:

revoked by a further Order in Council which came into effect	t
t:
on 30 April 1969, but Order 2 thereof preserved existing	I
I-
I,
rights and Order 3 continued the recognition in Australian law of works of Danish subjects and residents and of works first published there. Interlego acquired ownership of the copyright in Drawing No. 5, by assignment, on 17 May 1983.
The 1968 Act came into force on the day after the Order in Council referred to above, that is to say on 1 May 1969. This was more than a year after the date of Drawing No. 5. The 1968 Act repealed the 1912 Act and excluded the further operation in this country of the 1911 Act (ss. 5, 6). But sub-S. 5(2) made it clear that the savings provided for in S. 8 of the acts Internretation Act 1901 ("the Interpretation Act") applied. Save for Crown copyright, copyright does not subsist in Australia otherwise than by virtue of the 1968 Act
(S. 8).
Part XI of the 1968 Act comprises ss. 204-248, and is headed "Transitional". Section 207 states:

"207 Except in so far as this Part otherwise expressly provides, this Act applies in relation to things existing at the commencement of this Act in like manner as it applies in relation to things coming into existence after the commencement of this Act."

Sections 37 and 38, to which I have referred, are included in Part I11 of the 1968 Act. In relation to works made after 1 July 1912, and first published before the commencement of the 1968 Act (that is to say 1 May 1969), S. 210 relevantly provides that, notwithstanding anything in Part 111, copyright does not subsist by virtue of that Part in such a work unless copyright subsisted in it under the 1911 Act.

Division 8 of the Part I11 (S. 74-77) of the 1968 Act made provision as to "corresponding designs" in relation to an artistic work, that is to say designs which when applied to an article result in a reproduction of that artistic work. In particular, where S. 77 applied, certain activities which otherwise would have been wrongful under the copyright law were treated as not being infringements. However, Division 8 of Part I11 did not apply to artistic works made before the commencement of the 1968 Act. This was stated by sub-S. 218(1).

Sections 74, 75, 77 were repealed with effect on 1 October 1990, by ss. 10, 11 of the Co~vriaht Amendment Act 1989 ("the 1989 Act"). New provisions were inserted in their place. The primary Judge had reserved his decision on 4 May 1990. Written submissions concerning the changes to the law

were received, but on the view his Honour took of the case no	question arose under S. 77 in any of its forms, and he said he
would not deal with the new legislation (102 ALR at 405). But on the appeal, the appellants still pressed for injunctive relief. Subject to any issues which arise as to the reception at this stage of fresh evidence, we should deal with the law as it now stands, particularly in reaching a conclusion as to injunctive relief: Trade Practices Commission v Milreis Pty Ltd (No. 21 (1978) 32 FLR 234 at 241. I return to this subject later in these reasons.
The interaction between copyright and design law in respect of Drawing No. 5 is controlled by sub-S. 218(2) of the 1968 Act. This provision is central to the present appeal. It states:

"218 (2) Copyright does not subsist by virtue of this Act in an artistic work made before the commencement of this Act which, at the time when the work was made, constituted a design capable of being registered under the Desians Act 1906, or under that Act as amended and in force at that time, and was used, or intended to be used, as a model or pattern to be multiplied by an industrial process."

[Emphasis supplied].

The phrases emphasised were not in S. 22 of the 1911 Act. However, they give to sub-S. 218(2) the sense attributed by the House of Lords to S. 22; see Kina Features Syndicate. Inc. v 0. & M. Kleeman Ltd (1941) 58 RPC 207. Thus S. 218 reflects the sense of the old law. The 1911 Act would not have applied to works caught by this sub-section. Section 22 of the 1911

Act would have achieved that result. Sub-section 218(2) thus

is a particular application of the general operation of S. 210

of the 1968 Act. This is to deny copyright under the new law

where it did not subsist under the old.

The appellants submit that on 4 March 1968, when Drawing No. 5 was made, whilst it was intended for use as a model or pattern to be multiplied by an industrial process, it did not then constitute a design "capable" of being registered under the Desians Act 1906 ("the 1906 Act") as amended. Section 17 of this statute then provided for registration of any new or original design which had not been published in Australia before the lodging of an application for its registration.

It is common ground that even if Drawing No. 5 "constituted a design" within the meaning of sub-S. 218(2), nevertheless it was not "new or original" when it came into existence. This is because it was derived from earlier drawings which had been published in Australia. Further, the appellants submit that the design was dictated solely by the function of the brick depicted in it, that it represented no more than the "fundamental form" of an article and not a "particular individual appearance". It is said that were it not for the need for the bricks to interlock, there would be no need for the studs and cylinders depicted in the drawings. The appellants contend that the definition of "design" in S. 4 of the 1906 Designs Act forbad the registration of such a design. For its part, the respondent submits that the design

did not have these characteristics and that, although not new

or original, nevertheless it was still, within the meaning of

sub-S. 218(2) of the 1968 Act, an artistic work which "constituted a design capable of being registered under the Desians 1906 . . .". It was, they say, so capable because it answered the definition of "design" in that statute and it did not cease to have that intrinsic quality because its lack of novelty made it unregistrable.

I propose to put to one side the question of dictation solely by function and cognate matters and to come to the other copyright and design issues in respect of pre-1969 drawings, with particular reference to Drawing No. 5. I will also defer consideration of the copyright and design issues in respect of post-1969 drawings.

Sub-section 74(l) of the 1968 Act uses the expression "corresponding design" as meaning "a design that, when applied to an article, results in a reproduction of that work". This spells out what previously was obscure. Section 22 of the 1911 Act and its descendants use the phrase "designs capable of being registered" and state that the 1911 Act should not apply to those designs. The terms of S. 22 present a difficulty which arises from the fundamental distinction between copyright in an artistic work and a design within the tens of the definition in the designs legislation. Lord Romer referred to it in his speech in Kina Features suDra at 221-2.

On the other hand, before 1911 that distinction was not so sharply drawn. Counsel for the respondent referred us, by way of example, to the use of the term "design" in the Fine Arts Co~vriaht Act 1862 (UK) ("the 1862 Act"). Section 1 thereof conferred the sole and exclusive right of copying, engraving, reproducing and multiplying a painting "and the design thereof". A question debated in Hanfstaenal V

Baines & Co. Limited [l8951 AC 20 at 23, 27-8, 30, was whether the expression "design" meant anything more than the particular forms and arrangements which comprised the vehicle selected by the artist to express his work. The House upheld the decision of the Court of Appeal that there was no infringement of the pictures in question by tableaux presented on stage at the Empire Theatre as "Living Pictures". Counsel also referred to the definition of "author" (in the International Co~vriaht Act 1886, S. 11) as meaning "the author, inventor, designer, engraver, or maker of any literary

or artistic work . . .".

To more modern eyes, it is an odd use of language to speak of a copyright statute not applying to "designs". How could the copyright law concerning drawings have applied, in any event, to a registrable design for the shape of an article? The point was put as follows by Mr Blanco White QC in "Patents for Inventions", 4th Ed, 1974, pp. 331-2:

"[Ilt is hard to see how any ordinary

a design'. It is no doubt possible to	drawing can be 'capable of registration as
speak of an adequate representation of a design as 'registrable' - meaning that the Patent Office would accept it as a adequate representation - but this is no more than a somewhat slovenly ellipsis: what is registered is not the representation but the design itself, i.e. the 'features of shape, etc, applied to an article'."

The learned author draws from this the conclusion that a provision framed in the terms of S. 22 would cut down the ambit of copyright protection but not completely exclude from copyright the drawing in question. On this view there would be no infringement of copyright by reproduction of the drawing in a three dimensional form, something with which the designs legislation is concerned, but it would be an infringement of the copyright to reproduce the drawing in a two dimensional form. It will be necessary for the purposes of this appeal to refer later to this question. The contrary was not contended for in Kina Features suDra at 218, 11. 38-42. But this case is primarily concerned with the use to which Drawing No. 5 has been put immediately by Lego and indirectly by Wco in its application to three dimensional articles.

Desicm Co~v-riaht "Overla~' ore-1969

The phrase "artistic work . . . which . . . constituted a design capable of being registered . . ." was found in the copyright legislation in force in Australia for many years before the commencement of the 1968 Act. The parties accepted that assistance in construing S. 218 is to be derived from the earlier legislation. There is no authority construing that

legislation which is binding upon us.	I prefer to approach
the matter afresh.

To appreciate the setting in which the earlier legislation operated, it is necessary first to turn to Imperial law. In the 1911 Act the phrase "self-governing dominion" was defined as meaning inter alia the Commonwealth of Australia. Sub-section 25(1) provided:

"25 (1) This Act, except such of the provisions thereof as are expressly restricted to the United Kingdom, shall extend throughout His Majesty's dominions: Provided that it shall not extend to a self-governing dominion, unless declared by the Legislature of that dominion to be in force therein either without any modifications or additions, or with such modifications and additions relating exclusively to procedure and remedies, or necessary to adapt this Act to the circumstances of the dominion, as may be enacted by such Legislature."

The 1912 Act commenced on 20 November 1912. It repealed (S. 4) the earlier Australian statute, the Co~vriaht Act 1905 ("the 1905 Act"). Section Sl(xviii) of the Constitution empowers the Parliament to make laws with respect to "Copyrights, patents for inventions and designs, and trade marks". The 1912 Act set up an optional registration system in Australia and also provided for various summary remedies. Section 8 provided that the 1911 Act, a copy of which was set out in the Schedule, "shall, subject to any modifications provided by this Act, be in force in the Commonwealth, and shall be deemed to have been in force therein as from the first of July, One thousand nine hundred and twelve". Section

expressed in the proviso to sub-S. 25(1) 1911 Act, set out	8 of the 1912 Act was enacted in fulfilment of the condition
above. The 1911 Act thenceforward operated in Australia of its own force and not as a law which was simply the product of an exercise of Commonwealth legislative power: Co~vriaht
Owners Re~roduction Societv Limited v EM1 (Australia 1
Pro~rietarv Limited (1958) 100 CLR 597 at 604, 616-7. The 1912 Act did include many provisions which were not mere modifications of the 1911 Act, and those rested for their authority on the general power of legislation conferred by the
Australian Constitution: The Gramouhone ComDanv Limited v Leo Feist Incorporated (1926) 41 CLR 1 at: 15.
Section 9(c) of the 1912 Act provided that in the application of the 1911 Act to the Commonwealth, S. 22 of the Imperial Act should be read as follows:

"22 (1) This Act shall not apply to designs capable of being registered under the Desicms A c t 1906, except designs which, though capable of being so registered, are not used or intended to be used as models or patterns to be multiplied by any industrial process.

(2) General rules under section forty one of the Desians Act 1906 may be made for determining the conditions under which a design shall be deemed to be used for such purposes as aforesaid."

The definition of "design" in the 1906 Act (S. 4) then stated:

"'Design' means an industrial design applicable, in any way or by any means, to the purpose of the ornamentation, or

pattern, or shape, or configuration, of an	article, or to any two or more of those
purposes."

Section 17 stated:

"Any new or original design, which has not been published in Australia before the lodging of an application for its registration, may be registered under this Act in respect of all or any of the articles included in one or more of the classes in the prescribed classification."

As enacted by the Imperial Parliament, S. 22 of the 1911

Act provided:

"22 (1) This ~ c t shall not apply to designs capable of being registered under the Patents and Desians Act. 1907, except designs which, though capable of being so registered, are not used or intended to be used as models or patterns to be multiplied by any industrial process.

(2) General rules under section eighty six of the Patents and Desians Act. 1907 may be made for determining the conditions under which a design shall be deemed to be used for such purposes as aforesaid."

At that time in the United Kingdom the definition of "design" in the Patents and Desians Act 1907 (UK) ("the 1907 Act") was as follows:

"'Design' means any design (not being a design for a sculpture or other thing within the protection of the Sculpture Copyright Act, 1814) applicable to any article, whether the design is applicable for the pattern, or for the shape or	configuration, or for the ornament	thereof, or for any two or more of such
purposes, and by whatever means it is applicable, whether by printing, painting, embroidering, weaving, sewing, modelling, casting, embossing, engraving, staining, or any other means whatever, manual, mechanical, or chemical, separate or
combined. "

Section 49 of the 1907 Act authorised the registration of "any new or original design not previously published in the United

Kingdom" .

The reference in S. 22 of the 1911 Act to the 1907 Act was construed by the English Court of Appeal in an ambulatory sense. The result was to include in s . 22 of the 1911 Act a reference to the designs statute as amended from time to time after the commencement of the 1911 Act: Usher v Barlow (1951) 69 RPC 27 at 34-5. That conclusion rested at least in part upon the operation of the Interpretation Act 1889 (UK) S. 38. In Australia, the corresponding result flowed from S. 10A of the Interpretation Act (inserted by the Acts Interpretation

1916, S. 2) as well as from S. 10 in its original form, and later from the new S. 10 (inserted by S. 4 of the Acts Citation Act 1976, which repealed the old ss. 10 and 10A). Despite suggestions to the contrary by counsel on the present appeal, I do not see in Usher v Barlow any consideration of the question of whether S. 22 of the 1911 Act applied "retrospectively" to artistic works made before the commencement of the 1911 Act.

What does follow from this case and the provisions of the during the life of S. 22 of the 1911 Act as applied by the	Interpretation Act to which I have referred is that when,
1912 Act, the 1906 Act was amended from time to time, S. 22 was thereafter to be read so as to accommodate those changes to the design law.
It will be necessary to refer further to the state of the copyright law in Britain in relation to published works before the 1911 Act, but it should be noted that there were instances

where the law was treated as offering double protection. An example is provided by Millar & Lana Limited v Polak [l9081 1 Ch 433. In that case, drawings made for use on mass produced Christmas cards were protected under the 1862 Act. This was despite the submission (at 439) that the drawings were really designs within the definition in S. 60 of the Patents, Desians. and Trade Marks 'Act 1883 (UK) ("the 1883 British Act"), and that they should have been registered under that statute, save that their novelty had been lost by publication.

One of the statutes repealed by the 1911 Act was the Scul~ture Co~vriaht Act 1814 (UK). This gave a term of

copyright of 14 years with a further reversionary term of 14 years if the author was still living. There was significant scope for dual protection under this law and the later statutes providing for registration of designs applicable to the shape and configuration of articles. The legislature shifted ground several times. In 1843 (by the co~vriaht of Desians Act S. 2) dual protection was not permitted and

subject matter falling within the 1814 statute was excluded	from the design law. Then by S. 6 of the Co~vriaht of Desians
Act 1850, registration was permitted under the designs law for a term being the whole or the remaining portion of the term under the 1814 statute, as against a shorter period for other designs; see C P Phillips "The Law of Copyright", 1863, p.
227. In 1883, designs for sculptures within the 1814 Act were again excluded from the definition of "design". Thus, at the time of the 1911 Act, designs for sculptures were not capable

of registration under the designs law but were protected under the 1814 statute. The 1911 Act (sub-S. 35(1)) included works of sculpture as artistic works.

Desiqn and Copvriqht Law before 1912

It is important in construing S. 22 of the 1911 Act, both in its British and Australian form, to appreciate the distinctions which by that time had appeared between design law and the law as to copyright-in drawings and other artistic works. I mention three of them. First, the maximum period of protection was generally longer under the copyright law than that extended under the designs legislation, a state of affairs that still continues. Secondly, whilst various copyright statutes provided for a registration system, title did not depend upon registration. That is to say, registration was a pre-condition to the bringing of an action for infringement, but once registered a plaintiff might sue in respect of anterior activities of the defendant: v Lawrence (1886) 54 LT 371; E.W. Savorv. Limited v The World of

Golf Limited 119141 2 Ch 566; Finn v Pualiese (1918) 18 SR	(NSW) 530 at 532-3. On the other hand, since the statute 2
Vict c. 17 of 1839, title to designs has arisen from and depended upon registration. Thirdly, the design law required "novelty or originality" and, whilst the concept of novelty was not the same as that developed in the patent law, it was related to it: Lazarus v Charles (1873) LR 16 Eq 117 at 121; &Q& v Tree (1892) 9 RPC 333 at 334. The copyright law fixed
not upon novelty but upon the skill and labour of the author

<

as something deserving protection; see Sands & McDouoall Pro~rietarv Limited v Robinson (1917) 23 CLR 49 at 55-6, where

I ,

Isaacs J refers to a number pre-1911 decisions.	L	~
It is also important to appreciate that whilst the designs statutes had been concerned with protection of concepts of, inter U, shape applied to articles, after the 1843 Act designs might be registered for shape and configuration of articles having reference to utilitarian purposes. Protection of shape by this means might go some distance to protecting mechanical function, the province of patent law. Thus, the design law has been bedevilled by "overlap" questions as regards not only the copyright but also the patent law. The 19th century English decisions tolerated protection of designs with a functional element: Hecla Found-
com~anv v Walker Hunter & Co. (1889) 14 App Cas 550 at 555; Hosokawa Micron International Inc. v Fortune (1990) 26 FCR 393 at 399-408, 416-422.

In two respects, patent and design law resembled each

other and differed from copyright law; novelty was essential
and title was created by grant of registration.

In the United Kingdom, the 1907 Act came into force on 1 January 1908 (see S. 99).

It increased the maximum period for

design registration to 15 years (S. 53). The 1883 British Act had, by S. 50, provided for a maximum registration period of 5 years. It follows from this chronology that upon the commencement on 1 July 1912 of the 1911 Act, there would still have been current registrations of designs effected under the 1883 British Act, that is to say before the compmencement of the 1907 Act. Section 98 of 1907 Act had repealed, inter

U, S. 50 of 1883 statute but stated that, except where

otherwise expressly provided, the 1907 statute "shall extend

to . . . all designs registered before the commencement of

this Act, and to applications then pending, in substitution for such enactments as would have applied thereto if this Act had not been passed".

In Australia, the 1906 Act, dealing with designs, had come into force on 1 January 1907, the same day as the 1905 Act, dealing with copyright. No provision in either statute dealt with any "overlap" between them. Section 6 of the 1906 Act saved rights acquired under State designs statutes whilst providing that fresh applications would not be receivable thereunder. As I have indicated, the federal statute came

provided for 5 year registration of designs: The Patents.	into force on 1 January 1907. Certain of the State Acts
Desians and Trade Marks Act 1884 (Qld) S. 50, The Desians and Trade Marks Act 1884 (WA) S. 7, and The Patents Desians and Trade Marks Act 1893 (Tas) S. 58. Other statutes provided for a maximum protection by registration for 3 years: the Copvriaht Act 1879 (NSW) S. 34, the Copvriaht Act 1890 (Vic) S. 4, and the Copvriaht Act 1878 (SA) S. 3. The 1906 Designs Act provided for a 5 year registration (S. 26). But this was increased to a maximum of 15 years by S. 3 of the Desians Act 1912, ("the 1912 Designs Act").
The 1912 Act introduced the 1911 Imperial copyright legislation with retroactive effect to 1 July 1912. It follows from the above chain of events that, at that date, in Australia there would have been no existing registrations under any of the State Designs Acts. All would have expired.
The 1911 Act repealed wholly or in part the 21 statutes set out in the 2nd Schedule, commencing with the Enaravinq ~oovriaht Act 1734. (In referring to them in the course of these reasons, I have used the short titles first given them
by the Second Schedule to the International Co~vriaht Act 1886
(Imp) Section 24 of the 1911 Act created "substituted rights" in relation to those existing under the legislation thus repealed and, subject to exceptions not here material,
sub-S. 24(3) provided that copyright should not subsist in any
work made before the commencement of the 1911 Act otherwise than under and in accordance with the provisions of S. 24.
The enactment of a general consolidation of the copyright statutes had been first recommended in Britain by a Royal Commission which had presented its report in 1878; see Scrutton, "The Law of Copyright", 4th Ed, 1903, p. 48; "Copinger and Skone James on the Law of Copyright", 8th Ed, 1948, p. 13. In the Australian colonies, such a step had
already been taken in Victoria by the Co~vriaht Act 1869 (Vic). This dealt with designs as well as copyright in literary, dramatic and musical productions, and copyright in fine arts. South Australia followed with The Co~vriqht Act 1878 (SA), and New South' Wales with The Co~vriaht Act 1879 (NSW), both of which covered the same field as the Victorian legislation. Each of these statutes (S. 56 of the Victorian and South Australian Acts, and S. 55 of the New South Wales Act) provided that nothing in them should be deemed to affect the law of copyright as applicable in the colony by any Imperial statute then in force. Further, these and later statutes were concerned only with works made in the particular colony and with giving remedies under the local law in respect of infringement in that colony: Acland Giles, "Literary and Artistic Copyright in the Commonwealth" (1905-6) 3 Commonwealth & Rev 107 at 113. The extension to the Australian colonies of the British copyright law was a complex

matter. It was put on a regular footing, only after some anguish, by S. 8 of the International Co~vriaht Act 1886 (Imp); see Scrutton, supra, pp. 208-13. Thus, at the time of Federation, the law in force in this country was a patchwork of Imperial and colonial legislation. The matter is discussed further in WEA International Inc v Hanimex Cornoration Ltd (1987) 17 FCR 274 at 281-2.

The system of dual protection was continued in Australia when the Commonwealth entered the field with the 1905 Act. This statute applied to artistic works first made in Australia after 1 January 1907; see S. 35. Section 62 thereof provided:

"62. The owner of any copyright or performing right in any literary, musical, or dramatic work or artistic work entitled to protection in Australia by virtue of any Act of the Parliament of the United Kingdom or entitled to protection in any State by virtue of any State Copyright Act in force at the commencement of this Act shall on obtaining a certificate of the registration of his copyright or performing right under this Part of this Act have the same protection in the Commonwealth against the infringement of his copyright or performing right as the owner of any copyright or performing right under this Act."

The Commonwealth Parliament had regarded itself as subject to the restrictions contained in S. 2 of the Colonial Laws Validity Act 1865 (Imp) upon the passage of legislation repugnant to British statutes applying by paramount force; see the second reading speech in the Senate on the Copyright Bill, Hansard, 24 August 1905, pp. 1428-30. The correctness of that view was later established by The Union steams hi^ CO of New Zealand Limited v The Commonwealth (1925) 36 CLR 130 at 140-1,

reading speech (at p. 1430) that the Australian Bill had been	151-2, 153-4, 163, 164. The point is also made in the second
drawn largely upon what had been recommended in Britain by the Royal Commission in 1878 in a Report which had since languished.
The result in Australia was that as from 1 January 1907, and excepting then subsisting rights, federal legislation replaced that of the States as regards both copyright and designs but that, as regards copyright, there continued the dual system of Imperial and local legislation. The matter is further discussed by Professor Lahore in "Copyright", 1977, Ch
19; see also Acland Giles, at 145-6.
Section 8 of the 1905 Act provided that the State copyright statutes, being acts relating to copyright registration (see S. 41, would not apply to works in which copyright subsisted under new federal law, but that nothing in it affected rights previously acquired under or protected by the State laws before its commencement. The 1905 Act provided for literary, musical and dramatic copyright (Part 111) and for copyright in "artistic works", (Part IV), they being defined in S. 4 as including paintings, drawings, sculptures, together with engravings, etchings, prints, lithographs, woodcuts, photographs "or other work of art produced by any process, mechanical or otherwise, by which impressions or representations of works of art can be taken or multiplied". Section 34 was an important provision. It stated that
copyright in an artistic work included the right to reproduce it or any material part of it, "in any manner, form, or size,
in any material, or by any process, or for any purpose". The terms I have quoted were more widely expressed than the older statutes and anticipated the provisions of the 1911 Act, to which reference will later be made. (The same is true of the introduction by S. 34 into the law of infringement of the concept of "authorization": WEA International Inc v Hanimex cormoration Ltd supra at 282-6. ) Section 36 of the 1905 Act conferred copyright for the longer of (i) 42 years from the making of the work, and (ii) the author's life and 7 years thereafter.
The Scheme of the 1911 Act
In dealing with the issue of "overlap" between design and copyright protection, and in reaching an appreciation of the significance of S. 22 in the scheme established by the 1911 Act, it is important to appreciate the profound changes brought about by that statute in relation to published works.
First, the 1911 Act created new forms of copyright in subject matter where no statutory copyright had existed under the previous law. An example is in the protection thereafter given to works of architecture, being buildings or models for buildings; see Laddie, Prescott and Vitoria, "The Modern Law of Copyright", 1980, S4.18, 4.74.
$econdly, as a result of the operation of S. 24, the 1911 Act increased the period and scope of protection in relation
to certain species of subject matter existing on 1 July 1912. Thus, a general period of protection for published works of the author's lifetime plus 50 years was given in place of the miscellany of periods under the various laws in force before
1912. These are set out in tabular form in Laddie d,
suDra S5.20, and for most categories there was a considerable extension in the period of protection. Further, there was an expansion in the scope of the monopoly afforded by the legislation. Sub-section l(2) of the 1911 Act used the expression "to produce or reproduce the work or any substantial part thereof in any material form whatsoever". The provision went on to spell out in some detail various rights including, in the case of a novel, the right to convert it into a dramatic work by way of performance in public or otherwise. The change which this brought about in the pre- existing British law is illustrated by the following passage from Warne & CO v Seebohm (1888) 39 Ch D 73 at 80-81. The plaintiffs were the proprietors of the copyright in the novel "Little Lord Fauntleroy". In the course of his judgment, Stirling J said:

"The statute [5 and 6 Vict c 453 confers on the author of a book and his assigns 'the sole and exclusive liberty of printing or otherwise multiplying copies' of the book. By implication every person other than the author and his assigns is prohibited from printing or otherwise multiplying copies of the book. But this is the only restriction imposed on the public, and, subject to it, every person is free to make such use of the book as he pleases. So long, therefore, as he does

the novel, any person may dramatize it,	not print or otherwise multiply copies of
and may cause his drama to be publicly represented. But if, for the purpose of dramatization, he prints or otherwise multiplies copies of the book he violates the rights of the author no less than if the copies were made for gratuitous distribution."

In relation to artistic works, the matter was discussed as follows by Brennan J in computer Edue Pro~rietarv Limited v

A P D ~ Com~uter Inc (1986) 161 CLR 171 at 205-6:

"An exclusive right to reproduce a work in

which copyright subsists has been an aspect of copyright created by successive Copyright Acts. Each Act differed from the others, of course, in the terms and context by and in which that exclusive right was conferred. Under the Fine Arts Copvriaht Act 1862 (Imp) , the exclusive right 'of copying, engraving, reproducing and multiplying' an original painting or drawing 'by any means and of any size' was held not to be infringed by the representation of a painting by a grouping of figures in a tableau vivant: Hanfstaenal v Empire Palace C18941 2 Ch 1. The Copvriaht Act 1911 (UK), adopted subject to modifications by the co~vriaht

1912 (Cth), adopted a different formulation of the right. Section l(2) of the 1911 Act conferred 'the sole right to produce or reproduce the work . . . in any material form whatsoever'. That provision was thought to give wider protection to authors than that given by the 1862 Act and to remedy the effect of the decision

in ~anfstaen61 v Empire Palace . . .

Under the 1911 Act. the sole riaht of reproduction of a work is infringed -by its unlicensed reproduction in a material form different from the form in which the original work is made. The widening of protection was particularly significant for the protection of artistic works. The sole right to reproduce an artistic work was infringed by the unlicensed making, in any material form, of an object visually similar to and derived from the original work. "

(But it should be noted that, in Australia, S. 34 of the 1905

Act - described earlier in these reasons - may well have anticipated sub-S. l(2) of the 1911 Act.) Accordingly, the application of a drawing, being an artistic work, to the shape of a three dimensional object, would amount to copyright infringement, and the protection afforded by the copyright law would last for the life of the author together with 50 years, without, moreover, any need of registration. Those considerations made copyright protection more attractive than that given by the designs law, which both required registration and was effective for a shorter period.

Thirdlv, and this is in contrast to the points made above, in addition to creating fresh species of rights and augmenting other existing rights, the 1911 Act operated in derogation of some existing rights. The matter is discussed in detail in Copinger, 8th ed, suura at pp. 252-3. Two examples will suffice. The protection given by the 1862 Act to a photograph was for the life of the author and for 7 years after his death. Section 21 provided for the subsistence of copyright in photographs for 50 years from the making of the original negative. It followed that a photograph made more than 50 years before 1 July 1912 acquired no protection under the 1911 Act, although the author might then still have been living or have died less than 7 years before 1 July 1912, so that the period under the 1862 Act had not run out.

The other example of abrogation of rights concerns common law copyright. Section 31 of the 1911 Act, whilst preserving the law as to breach of confidence, stated that no person shall be entitled to "copyright or any similar right in any literary dramatic, musical or artistic work, whether published or unpublished" otherwise than under statute. The "existing rights" in respect of which fresh rights were given by S. 24 and the First Schedule included "the right at common law (if any) to restrain publication or other dealing" with the work.

The common law right essentially was to prevent publication of published works, a right said to last in perpetuity: see Pacific Film Laboratories Ptv Limited v Federal Commissioner of Taxation (1970) 121 CLR 154 at 166-8; Laddie et al, suDra 54.64-4.67.

It will have become apparent that the rights which subsisted in Australia prior to the coming into force of the 1912 Act included Imperial rights, which extended to Australia, together with rights conferred under the respective State copyright statutes and the Commonwealth Act of 1905.

Section 4 of the 1912 Act repealed the 1905 Act. But by S. 7

it continued the Copyright Register established under the 1905 Act as if it were established under the 1912 Act. Further, S. 6 provided that the administration of any State copyright Act, which had been transferred to the Commonwealth under the 1905 Act, should continue to be transferred and subject to the same terms and conditions as if the 1905 Act still remained in

force

.

These provisions indicate that it was not the intention of the 1912 Act, despite the repeal of the 1905 Act, to abrogate rights existing under the earlier and colonial legislation. The view has been taken that, in its application to Australia, S. 24 of the 1911 Act and the First Schedule conferred substituted rights, not only in relation to Imperial works protected in Australia by force of pre-existing Imperial law, but also in respect of works protected, in the manner I

2 8

have described, under the pre-existing local legislation: see, for example, Ricketson, "The Law of Intellectual Property", 1984, S7.22-7.24. That this is the correct interpretation is supported by the terms of S. 13 of the 1912 Act. The effect of this provision was that where copyright subsisted in the United Kingdom on or after the commencement of the 1905 Copyright Act, that is to say from January 1907, it should be deemed to have subsisted in the Commonwealth from the same date. This meant that United Kingdom copyrights which did not have an Imperial application were nevertheless afforded protection in Australia under the 1905 Act, and therefore became entitled to a substituted right in Australia under the 1911 Act in its application in this country: Pollock v

Williamson Ltd [l9231 VLR 225 at 229.

'Overlap' and Lesislative Intention

The only reference in the Australian Parliament to
design-copyright overlap during the debates on the Bill for

the 1912 Act concerned the shortness in the period of

Minister pointed out that S. 3 of the 1912 Designs Act would	registration of designs under the 1906 Act (5 years) but the
provide for a maximum of 15 years. (Hansard, House of Representatives, 30 October 1912, p. 4869.) In Britain, the Gore11 Committee, which had reported in December 1909 to the President of the Board of Trade (Mr W S Churchill MP) had said (p. 10) that it was desirable "to make it plain in any fresh enactment that the author of a work of art is to receive the general protection of copyright even though the work is
applied to industrial purposes".	Of course, this

recommendation was rejected by the adoption of S. 22. Likewise, the Committee's objection to a compulsory licence scheme for use of musical works in recordings was counterproductive. Section 19 of the 1911 Act introduced just such a scheme; see Appendix E to the 1979 "Report of the Inquiry by the Copyright Tribunal into the Royalty Payable in Respect of Records Generally", where there is reference to the successful lobbying activities of the nascent recording industry.

It may be noted, looking ahead, that S. 19 of the Patents and Desians Act 1919 (UK), effected an amendment of the definition of "design". It henceforth excluded "any mode or principle of construction, or anything which is in substance a mere mechanical device", and required of a registrable design that its features, in the finished article, "appeal to and are judged solely by the eye". Whilst describing this as "a high water mark of feeling against industrial property", Laddie

a say of the new definition (suDra 53.7):

"In fact, although this was not realised for many years, the tendency not to protect registered designs devoid of eye- appeal, culminating in the new definition, had almost the opposite of the effect that was presumably intended; for . . . it greatly increased the rights of designers of functional articles [under the copyright law]."

In Australia, when Drawing No. 5 was made in 1968, the 1906 Designs Act still did not use the explicit terns introduced in Britain in 1919. But similar results were achieved by judicial interpretation of the 1906 Act, as evinced by the decision in Hosokawa Micron International suora.

Did Section 22 of the 1911-Act a~plv	to re-existinq copvriaht
works?

In Interleqo AG v Rrco Industries Inc. [l9891 AC 217 ("the Hong Kong case"), the Judicial Committee was concerned with the question of "overlapu between designs and copyright law as it arose under British legislation in force in Hong Kong. Put in very broad terms, their Lordships decided the case by process of reasoning which, when applied to the relevant legislation in force in this country, would assist the respondent and hinder the appellant. Indeed, the primary Judge indicated that in reaching a decision adverse to the appellant, he was influenced by the reasoning of their Lordships (102 ALR at 398).

Their Lordships gave close attention to the construction of S. 22 of the 1911 Act. They decided that the phrase "capable of registration" referred to the kind of design for which the 1907 British Act was intended to cater, and that S. 22 did not fix upon designs barred from registration by reason of lack of novelty. They concluded that "novelty was not contemplated as a sine non of exclusion from artistic copyright": [l9891 AC at 253. This was so, although "read

literally", such exclusion would fall within the scope of the phrase "capable of registration". However, as will become apparent, in my view, the literal meaning of that phrase is not so confined. It is equally susceptible of a meaning of inherent adaptability to registration.

I return to that matter later in these reasons, but should indicate at this stage my acceptance of the reasoning of French J in the following passage from Kevlacat Ptv Ltd v Trailcraft Marine Ptv Ltd (1987) 79 ALR 534 at 550 as to the significance of the phrase in design law "novel or original":

"The subject of 'novelty' or 'originality' is sometimes addressed as though it describes an attribute of a design. This is understandable for the Designs Act itself uses the adjectival forms 'new' and 'original'. Yet on another analysis these words tell their reader not about the design but about what has gone before it. They refer to a time limit for

registration defined by reference to the

publication of other designs which may be

similar or identical.

Had the design in question been produced	prior to that which robs it of novelty or	originality it may have been registrable.
The only question would have been - is it a 'design' within the meaning of the Act? Viewed as temporal or historical references, novelty and originality properly fall outside the criteria of registrability.
The question of registrability then reduces to the question of definition - is that which it is sought to register a design or not?"

What calls for immediate discussion is the proposition,

assumed to be correct by their Lordships in the Hong Kong case and relied upon them in reaching their conclusion as to the construction of S. 22, that its operation was not merely prospective, that is to say in relation to works created after 1 July 1912, but that it operated to abrogate from 1 July 1912 copyright in respect of pre-existing works in which copyright then subsisted. The Board 'fixed upon the limited reference in

S. 22 to the design law, the section referring only to the

British Act of 1907, with no mention of its predecessor statutes. Their Lordships saw no rational distinction between denying copyright in relation to designs which were denied registration under the 1907 Act for lack of novelty, and those which were denied registration under the Act of 1883 for want of novelty. Therefore, in their view, it was the more likely that absence of novelty was not a criterion picked up by the phrase "capable of registration" in S. 22.

Whilst their Lordships pointed out (at 253) that the view

they reached as to the application of S. 22 to existing

correctness of the interpretation of the interpretation they	copyright works, did not "demonstrate conclusively" the
placed upon the phrase "capable of registration", plainly it was an important ground upon which they relied.
It will be becoming apparent that in my view S. 22 was to be interpreted prospectively and as not abrogating existing rights. But I am also of the view that nevertheless there are sufficient grounds for supporting the construction of the

phrase "capable of being registered" in the way which commended itself to the Judicial Committee, and which is contended for by the respondent. In other words, whilst the appellants may be correct in their attack upon this element of the reasoning of the Privy Council, that is not sufficient to win them the day on this appeal.

I turn to express the reasons which lead me to take a different view to that of their Lordships as to the temporal operation of S. 22 of the 1911 Act.

First, it is necessary to distinguish between statutes (i) which operate truly prospectively, that is to say only upon rights created after the commencement of the statute,

(ii) which operate upon presently existing rights so as to

qualify them or abrogate them with effect from the commencement of the statute, and (iii) which operate truly retrospectively, that is to say by attaching different legal characteristics to past events, which preceded the commencement of the statute: coleman v The Shell Com~anv of

Australia Limited (1943) 45 SR (NSW) 27 at 31; La Macchia v

Minister for Primarv Industrv (1986) 72 ALR 23 at 33-4. In some authorities, the term "retrospectiveu is used in sense

(ii). An example is the treatment by Lord Hanworth MR of S .

24 of the 1911 Act as "retrospective" in its operation because at the date it Came into force it replaced existing rights with substituted rights: In re Dickens 119351 Ch 267 at 289;

cf. Pacific Film Laboratories at 166 where Windeyer J

refers to this legislation as operating "in a sense
retrospectively".

Counsel for the appellants pointed to the need for a clear expression of legislative intent to overcome two presumptions in statutory interpretation, the first the presumption against retrospective legislation in the third sense mentioned above, and the other that against abrogation of existing rights in the second sense. Counsel submitted, with much cogency, that there was a lack of such clear intent manifest in S. 22 as it appeared both in the 1911 Act and 1912 Act. In particular, sub-S. (2) of both sections provided for the making of delegated legislation to determine the conditions under which a design "shall be deemed to be used" as a model or pattern to be multiplied by any industrial process. The sub-section is clearly looking to the future, not back to the past. Moreover, counsel submitted, the same point also tends against a construction which treats the law

as to the design-copyright overlap as conferring concurrent	rights up to 1 July 1912, but, by reason of S. 22, as having a
destructive effect thereafter.

I I

Where the 1911 Act abrogated existing rights, it did so in the clear tens, for example, of ss. 24 and 31. !

Section 24

abrogated any common law rights but substitutionary rights

I,

I

were then conferred pursuant to S. 24 and the First Schedule.	I
The phrase "copyright" in the First Schedule includes any	!
! .

common law rights; see In re Dickens suora at 297, 307-8. Section 24 also spelled out the system of "substituted rights" in respect of other existing works, and went on to say in sub- s. (3) that, with exceptions not here material, copyright shall not subsist in any work made before the commencement of the 1911 Act "otherwise than under, and in accordance with, the provisions of this section". There is nothing in ss. 24 and 31 to subject the regime thereby created to other provisions of the Act which also abrogated existing rights. The inference is that S. 24 is to be read not as subject to S. 22. The view of the construction of S. 22 derives some support from the treatment of the subject by the 1968 Act. As I have indicated, sub-S. 218(2) deals specifically with design-copyright overlap in relation to works in which copyright subsisted under the 1911 Act. But when the 1968 Act deals with copyright in works made before 1 July 1912 (in Part XI Division 5), it does not contain a provisions corresponding to sub-S. 218(2) to deal with design-copyright overlap in terms of S. 22 of the 1911 Act. This is consistent with a

view taken by the Australian legislature in 1968 that S. 22 of	the 1911 Act only applied to artistic works which were made
after it came into force, and did not have any operation upon works made before 1 July 1912.
The authorities touching the matter are not highly persuasive. In Steohenson. Blake & CO v Grant, Leuros & CO - Ltd (1916) 33 RPC 406 at 415, Eve J appears to have accepted the submission that the substituted right given by S. 24 of

3 6

the 1911 Act for existing works might be excluded by S. 22. (So also did Clauson J in Pvtram. Limited v Models JLeicester) . Limited [l9301 1 Ch 639 at 645.) However, Eve J held that because at the coming into operation of the 1911 Act the design in question was no longer new, it was not then "capable of registration", and thus was not excluded from

copyright under the 1911 Act. His Lordship appears to have been concerned that the consequence of accepting a contrary view would have been the complete loss of protection for works within the scope of the Gopvriaht Act 1842 or the 1862 Act, but not registe;ed under the designs law. However, their Lordships pointed out in the Hong Kong case (at 249):

"That decision has been criticised as leading to the absurd conclusion that a person who had a design registrable under the Act of 1907 but had not troubled to protect himself by registration retained his artistic copyright and was thus put in a better position than a person who had registered and who would so be deprived of his artistic copyright."

The correct construction of 'ca~able of reaistration"

in 1911 and 1912 Acts and in S. 218 of the 1968 Act

It undoubtedly is the case, as counsel for the appellants emphasised, that the copyright and design "monopoliesw are different in character. The essence of copyright as now understood is the prevention of copying, and the exclusive monopoly rights extend to the reproduction of two dimensional works into three dimensions. A registered design may be

infringed by a fraudulent copy but the 1906 Designs Act contemplated that an injunction (although no damages or penalty) might be awarded against an infringer who committed the infringement unknowingly and without notice that copyright in the design subsisted: S. 31. Further, the monopoly conferred by the 1906 Designs Act was concerned with application of the design "to any article in respect of which the design is registered": S. 30.

However, as I have indicated earlier in these reasons, with reference to the use of the word "design" and "designer" in the pre-1911 copyright legislation, the distinction was not then so clearly understood. The phrase "This Act shall not apply to designs capable of being registered under the Desians

- Act 1906 . . . ", in S. 22 of the 1912 Act, is properly to be

understood as contemplating an artistic work the design of which, in the sense, for example, of S. 1 of the 1862 Act, might also be a design susceptible of protection under the designs law. The word "design" where it appears in the

defined in the 1907 Act. Both that definition and the	opening words of S. 22 does not refer solely to "design" as
Australian definition in the 1906 Act (which contained the
phrase "'design' means any industrial design . . . " ) have been
criticised as tautological by defining a design for the purposes of the design statute in terms of itself. This would by no means have been understood to be so 80 years ago. Rather, there was a concept of "design" which might attract either or both the copyright laws or the law of registered

G

designs, in each case depending upon the terms of the relevant statutes. In S. 22 when first used, "design" refers to a species of artistic work in the sense of the copyright law.

So, the reader of S. 22 is to ask of that which is put forward as a "design" in this sense, whether it is capable of registration as a design within the meaning of the 1907 Act (in Britain) or the 1906 Act (in Australia). It follows that I do not accept the submission for the appellants that the two questions presented by the opening words of S. 22 are (i) is it a "design" within the meaning of the Designs Act and (ii) if so, is it "capable of being registered thereunder"?

I have indicated earlier in these reasons my agreement with the distinction drawn by French J. in Kevlacat supra between the characteristics of a "design" as defined in the designs legislation and the temporal or historical quality of novelty which is needed for a valid registration.

Further, I do not accept that a literal reading of the

phrase "capable of registration" is consistent only with the

construction contended for by the appellants. In my view,
reading the word "design" where it first occurs in the way I

have indicated, the phrase which follows it is consistent with

the construction contended for by the respondent. That for

which registration is sought will be "capable of registrationw

under the designs statute if of an inherent character which

answers the statutory definition. This will be so even if

P

3 9

there is no legal right to compel registration because the design lacks the temporal quality of novelty required by s. 17 of the 1906 Act or S. 49 of the 1907 Act.

The evident purpose of S. 22, contrary to the recommendations of the Gore11 Committee, was more against "double protection". This'purpose was implemented by ensuring that the full scope of artistic copyright which otherwise would be conferred under the 1911 Act in respect of new works (and which otherwise would prevent reproduction in any material form during a very long term) would be limited in respect of works also answering the description of a design under the 1907 Act. What was to be treated in this way was the "design" of the artistic works. This meant that, for example and consistently with the view of Mr Blanco White QC (repeated earlier in these reasons), it would still be an infringement of copyright in a drawing to produce it in a two dimensional form, although if S. 22 applied it would be no infringement to industrialise it by reproducing it in a three

dimensional form.

The discrimen established by S . 22 fixed upon the intention of the author of the work when he completed it, and asked whether he intended it simply as a work of art or as a model or pattern to be implied by an industrial process, or, as Viscount Maugham put it, "whether or not he regarded it as a species of commercial enterprise": Kina Features suDra at

The result of the application of S. 22 was to give the author no more than the rights given him by the designs statute. I appreciate what has been said as to the purpose of S. 22 being the avoidance of "dual protection" or "overlap", particularly by Kearney J. in Oaden Industries Ptv Ltd v

JAustralia1 Ptv Ltd [l9821 2 NSWLR 283 at 297-8, with reference to various authorities and learned writings. By "dual protection" may be meant the concurrent existence of artistic copyright and a design registration.

From this, counsel for the appellants developed the submission that there can be "dual protection" only where a design may be registered, and for this novelty is essential. Therefore, it is submitted, copyright will be lost by the operation of S. 22 only if the design is new or original and thus "capable of registration". That is said to make rational sense of S. 22. I do not accept the premises which underpin this construction of S. 22.

The appropriate starting point is that perceived by Viscount Maugham in pina Features m at 212. It is that authors who intended to use works for multiplication by an industrial process should not receive in full the extensive rights now to be given by the copyright law, particularly in respect of three dimensional reproduction of drawings, for a lengthy period. Rather, as his Lordship put it, the author should be left with no more than the rights the 1907 Act gave

him. If the work in question was a design capable of registration, in the sense of answering the definition in the designs law, then *he author was to be put in the same position as any other applicant for a design registration. He, like them, might fail to obtain registration because of prior publication by himself or a third party. But if that proved to be the case, S. 22 did not have the perverse effect of restoring fully his position under the copyright law. Rather, he was left with no protection in respect of the industrialisation of his work.

If the phrase "capable of registration" were to be interpreted so as to involve questions of novelty, the operation of S. 22 would be capricious. In Australia, a design drawing sufficiently novel to be entitled to registration for the maximum period of 15 years under the 1906 Act (S. 26) would be excluded from copyright protection; a design drawing lacking novelty and unregistrable nevertheless

would be entitled to copyright protection against three	dimensional reproduction for the full period of the life of
the author together with 50 years.
If various constructions of a statute are fairly open, the Court should adopt that construction which tends to further the evident purpose of the provision, rather than to defeat it or to produce a capricious result: Nimmo v Alexander Cowan & Sons Ltd [l9681 AC 107 at 121-2, Tickle

4 2

Industries Ptv Ltd v m (1974) 48 ALJR 149 at 153; cf Chuaq

v Pacific D U ~ ~ O D Limited (1990) 170 CLR 249 at 261-2.

Further, the issue of novelty or lack of it may be factually complex and the determination of the subsistence of copyright would thus depend upon circumstances remote from the traditional concerns of copyright law with the originality of the work, the nature of the work, the citizenship or residence of the author, and the place of first publication. It is true that S. 22 calls for a new type of inquiry, that as to the intention of the maker as to use as a model or pattern for industrial multiplication. But this additional requirement still stays close to the traditional criteria and does not present a range of inquiry as to the activities of third parties over a possibly long period of time. As Viscount Maugham pointed out in Kina Features suDra at 213, it calls for an answer which the legislature may have thought it would not be very difficult to obtain.

The acceptance of the concept of novelty as included in the express ion "capable of registration" would, as I have indicated, produce results which would hinder rather than advance the evident statutory purpose. To treat the concept of "capacity" as referrable to the inherent character of a design does not avoid all difficulties. But, as will appear, the acceptance of the existence of those difficulties is no reason for adding to them by introducing the concept of novelty.

4 3

The concern in the designs legislation, particularly as interpreted by the Courts, of excluding purely functional designs in respect of mechanical devices more properly the subject of the patent law, has produced the result that what otherwise might be design drawings capable of registration under the Designs Act, and therefore excluded from copyright protection by S. 22, will not be so excluded. The result will be that, as indicated earlier in these reasons, there is an anomaly.

I appreciate that, on any view, drawings of articles whose features are dictated solely by function will enjoy copyright protection notwithstanding their industrial application, because they fall outside the definition of "design". The same will be so of drawings which lack "eye appeal". Nevertheless, as regards functional designs, the existence of the copyright protection is counter-balanced by the maintenance of the policy as regards the patent law. In any event, the existence of some "anomalies", whichever of the

reason for further defeating the evident purpose of the constructions proffered by the parties be adopted, is no legislation by accepting the contentions of the appellants.

I accept the respondent's submission that in S. 22 of the

1911 Act, and of the 1912 Act, the phrase "capable of

registration" refers to the possession of the characteristics of a "design" within the meaning of the designs law, and that Drawing No. 5, although not novel, was not for that reason not "capable of registration". The corresponding construction should be given S. 218 of the 1968 Act. This means that copyright does not subsist in Drawing No. 5 by virtue of the 1968 Act, provided it otherwise answers the definition of - "design" in the 1906 Act.

Before moving from this aspect of the appeal, I should indicate that whilst I have preferred to state the reasoning for my conclusions other than by extensive reference to what has been said in certain recent decisions, I have not been unmindful of them. They come from jurisdictions as diverse as Australia, the United Kingdom, Canada, Hong Kong and Israel and include Interleao AG v Alex Follev IVic) Ptv Ltd [l9871 FSR 284, Bavliner Marine Cor~oration v Doral Boats Limited [l9871 FSR 497 and Interleao AS v Exin Lines Bros SA (an unreported judgment of the District Court in Tel Aviv-Jaffa in civil matter 331/85). No clear path emerges from the case law. None of it binds this Court. I have preferred to approach the matter of statutory construction more directly.

This brings me back to the issues of function, and

" fundamental form" .

Fundamental Form

The appellants rely on the notion of fundamental form as the basis for two distinct submissions. The first is that novelty is inherent in the concept of a design: that is, in order to be a design, the shape of an article must have

There were three aspects to the argument presented by the appellants at first instance:

(i)       that Tyco .bricks do not "work with" Lego bricks, nor Tyco Pre-School bricks with Duplo, because of discrepancies in the forces needed to assemble and separate different combinations of bricks (described as "clutch power");

(ii)      that Tyco Pre-School bricks do not "work with" Duplo because they do not work with Lego without the aid of a special connecting brick (described as the "grey adaptor brick"); and

(iii)     that Tyco bricks and Pre-School bricks do not in general "work with" Lego and Duplo because some pieces in the Tyco range simply do not connect with, or perform in the same way as,

their equivadlents in the Lego range.

The primary Judge did not accept the appellants' arguments with respect to clutch power or the grey adaptor brick. The appellants took issue with those findings. However, his Honour did accept the appellants' argument on what he described as the "more general matters". Consequently, his Honour held that the respondent was in breach of S. 52 of the TP Act in representing that Tyco "WORXS WITH LEGO" and that

9 7

Tyco's range of Pre-School blocks "WORKS WITH LEGO'S DUPLO". This finding was the subject of a cross-appeal filed by the respondent.

Before considering each of these matters in detail, some observations concerning the meaning of the words "works with" should be made. The primary Judge approached the issue as follows (102 ALR at 422):

"A starting point for a consideration of

their meaning is evidence of the meaning which Tyco itself intended them to have. This is made clear by the evidence of Mr Grey [President and Chief Executive of Tyco in the U.S. ] earlier referred to. I shall not repeat it in detail. But Tyco's marketing - and thus the respondent's marketing also - was based upon it being able to persuade customers that they could buy Tyco products and use them interchangeably with Lego products. Mr Grey referred to 'the toy box concept'. It did not matter to a child playing with a mixture of Tyco and Leg0 blocks whether he picked up a Tyco block or a Lego block; either would do the job.

In this area of the law a court does not lightly attribute to words such as are in

question here a meaning narrower or more
restricted than that which the party using

them intended them to have. There may be cases where one will do this, but if, as here, there is an ambiguity, the ambiguity must be resolved adversely to the party which has used the words."

Counsel for the respondent disputed both the relevance of intention, in particular the evidence of Mr Grey, and the validity of the principle (described in argument as akin to the contra proferentem rule) that any ambiguity in a statement should be resolved against its maker in cases under S. 52 of the TP Act.

It is well established that the demonstration of a fraudulent intention may be used to support an inference that the intent was effectuated and that there was a contravention of S. 52 of the TP Act: Rhone-Poulenc Aurochimie SA v K M Chemical Services Ptv Ltd (1986) 12 FCR 477 at 488 per Bowen

CJ.

However, there is a difference between inferring deception from an intention to deceive and inferring a contravention from an intention to use words to convey a certain message. Here, there was no evidence that the respondent intended to deceive consumers, and indeed the appellants made no such submission. In the circumstances, the evidence of Mr Grey as to the meaning which the words "works with" were intended to convey can be no substitute for, and can be of little assistance in determining, the objective

the words to convey.	question of what meaning Australian consumers would understand
The proposition accepted by the primary Judge that any ambiguity in a statement should be resolved contrary to the interests of the person making the statement appears to be taken from contract law. Its proper sphere of operation is restricted to the situation where it is sought to interpret the meaning of an agreement between defined parties, and it has no application to the situation where it is contended that a representation about goods made to consumers at large is misleading and deceptive.
Nevertheless, the primary Judge did address the essential issue of how consumers would interpret the words in the bullet. In doing so,'. his Honour made some important observations (102 ALR at 422-423) which I would respectfully adopt:

"One aspect of this case which needs to be remembered is that the case is about children's toys. Children are intended to buy or to ask parents and others to buy Tyco products for them. Thus, the respondent's and Tyco's packaging and marketing are directed at children who may not be as discerning as older people. To my mind this consideration has especial relevance to this part of the case. Children may not care very much whether Tyco blocks are made by Lego; but they will certainly be very concerned about the question whether Tyco blocks will in fact work with Lego blocks."

The primary Judge found that the meaning conveyed by the words "works with" was that Tyco was interchangeable with Lego. I agree. This interchangeability may best be described by reference to what both parties termed the "toy box" concept: the representation was that it would not matter to a child playing with a mixture of Tyco and Lego blocks whether he picked up a Tyco block or a Lego block; either would do the job.

clutch Power

The respondent conceded that the representation "WORKS WITH LEGO" applied to any combination of Tyco bricks with Lego bricks, just as "WORKS WITH LEGOfS DUPLO" applied to any combination of Tyco Pre-School bricks with Duplo bricks. Indeed, the respondent sought to limit the representation to such situations and argued that it should not be interpreted as applying more generally to all the pieces in the Tyco and Lego range.

Counsel for the appellants argued that the representation made by the respondent was misleading because the forces needed to assemble and separate Lego bricks were different from those needed to assemble and separate combinations of Tyco and Lego bricks. A similar argument was made in relation to the forces needed to assemble and separate Duplo bricks and those needed for combinations of Duplo and Tyco Pre-School bricks. Each argument depends on similar tests and similar expert evidence. For the sake of brevity, I will concentrate

on the case with respect to Tyco bricks and Lego bricks.

The evidence about clutch power was given principally by

Mr P N Randers, and Associate Professor Morton.

Mr Randers is Vice-President of the Department of Product Engineering in the Lego Group. His duties include the assessment of new concepts for products, and the monitoring of the existing range of products. The primary Judge concluded

from his evidence (102 =R at 423) that:

"Clutch power is a matter which is of substantial concern to Lego in the manufacture of its components in all its factories wherever they are in the world. There is continuous testing and samples of products manufactured in various factories are returned to Billund at regular intervals for checking. The evidence establishes that clutch power is an all important aspect of Lego's product. It is critical to the success of it. If blocks fit too tightly, children will not be able to dismantle objects easily; if they fit too loosely, objects which they have built will not be stable."

The respondent did not dispute those findings. Rather, it was argued that the clutch power of Tyco bricks did not differ so significantly from that of Lego bricks as to make misleading the representation that the one works with the other.

To substantiate their argument, counsel for the

appellants introduced evidence of tests done on Lego and Tyco

bricks by Lego in Denmark, and by Professor Morton who had

been engaged to carry out independent tests. Professor Morton

is currently head of the Department of Applied Physics at the University of New South Wales. He is a Fellow of the Australian Institute of Physics and a Fellow of the Institute of Physics (UK). I will not describe in detail the forces measured or the means used in the different tests except insofar as such details are immediately relevant to explaining the results of those tests.

Although the numerical results derived from each set of tests was different, due to the different devices used to measure clutch power, the relationship between the figures for Lego bricks and the figures for Lego and Tyco combinations was the same. The evidence established that the force needed to assemble and separate Lego bricks varied less than the force needed for combinations of Lego and Tyco. That is, the clutch power of Tyco was outside the range that Lego maintained through extensive quality control.

Counsel for the appellants argued that having established that clutch power is a critical aspect of Lego's products and that Tyco's clutch power is outside the range monitored and maintained by Lego, they were entitled to succeed under S. 52 on the grounds that it was misleading to represent that Tyco bricks were interchangeable with Lego bricks.

The primary Judge did not accept the second step of this that Professor Morton's tests did not "appear to bear any	argument. To some extent, this was based on the conclusion
relationship with Lego's own results". As explained above, although the results were numerically different, the relationship between the figures obtained for Tyco and Lego in the tests was the same. Indeed, his Honour recognised this (102 ALR at 425) with respect to the different results that were obtained in tests in Denmark:

"It emerged that the later tests done by Lego had been done on yet another machine which was different again from either the machine earlier used by Lego or the machine used by Professor Morton. It was a faster machine than either of those machines. It appears however that one may equate the 16 newtons referred in the earlier Lego report was 21 newtons achieved on the new machine."

Thus, this finding which was attacked by the appellants, does not appear to have been critical in his Honour's reasoning.

What was critical in the primary Judge's reasoning were the factors that could alter or distort clutch power.	He said
(102 ALR at 425-6):

"I have reached the conclusion that I cannot be satisfied that the Lego case based on clutch power is made out. It seems to me that there are too many variables and mponderables involved. Lego products are used in so many different circumstances and so many different climates that the area is one in which cannot be certain of one's facts."

Some of these variables had been referred to earlier in his

Honour's judgment (102 ALR at 424):

"Clutch power can apparently be affected by the conditions in which blocks are used and stored. These conditions include weather conditions, particularly heat or cold and humidity, perspiration on a user's fingers and dust. Light may also play a part."

The appellants addressed this conclusion in two ways. First, they argued that the evidence established, as the primary Judge indicated, that clutch power might vary during the first few separations of the bricks, but would stabilise after the fifth pull. Secondly, they argued that climatic factors would influence both Lego and Tyco equally. The crucial issue was not whether a hot Lego brick would work with a cold Tyco brick, but whether Tyco would work with Lego at the same place, at the same time, indeed, in the same "toy box".

was essentially at issue was a matter of judgment: whether the clutch power of Tyco so differed from that of Lego that it would be misleading to state that the one worked with the other. The primary Judge had the benefit of expert witnesses and formed an opinion (102 ALR at 426) on that exact issue:

"[Ilt is not apparent on the face of the scientific evidence which has been called that the respondent's clutch power is significantly inferior to that of Lego."

The appellants did not establish that that finding was

attended with sufficient doubt for this Court to disturb it.
G e v Ada~tor	Brick

The appellants' argument on this point ran as follows: the respondent represented that Tyco Pre-School bricks worked with Duplo; one of Duplo's performance characteristics is that it works with Lego; so, the respondent represented that its Pre-School bricks work with Lego; that is a misleading representation because Lego cannot connect with Tyco Pre-

School bricks without the aid of a grey adaptor brick.

The primary Judge rejected this argument at its crucial third step (102 ALR at 428):

"[Tlhe critical. words in the bullet, 'Works with Lego', or 'Works with Lego's Duplo', do not claim compatibility between Tyco super blocks and Duplo or compatibility between Tyco pre-school super blocks and Lego. It was submitted that I should infer that this representation was made. I have given the matter due consideration but, on reflection, do not think that I should take that course. I do not therefore accept the case made by Lego in relation to the grey adaptor brick."

I would respectfully adopt his Honour's reasoning.

eneral Matters

The appellants' argument here does not depend on clutch

power. Rather, it depends on the fact that some pieces in the Tyco range do not connect with pieces in the Lego range, or do

not perform in the same way as their Lego equivalents.

Whereas counsel for the respondent agreed that the words "works with" extended to bricks, it disputed the primary Judge's finding that the representation extended to all pieces in the Tyco and Lego range. His Honour's findings on this point were the subject of a cross-appeal.

The respondent argued for the limited scope of its representation on two main grounds. The first involved looking at the entire bullet within which the words "works with" appear; the second involved looking at the way in which the appellants themselves used phrases such as "works with".

AS well as stating "WORKS WITH LEGO", the bullet on the packet of Tyco bricks depicts two bricks joined together and states "Tyco super blocks connect to Lego blocks". The respondent argued that the picture and the second statement amounted to a qualification of the first, so as to limit any representation to bricks alone. The primary Judge described that ,as a construction which was "open", but rejected it on the grounds that it was not the construction intended by the executives of Tyco. As indicated above, the intention of the

.>

person making a statement, in the absence of fraud, should not be decisive of an issue of construction arising under S. 52 of the TP Act.

Nevertheless, the construction adopted by his Honour may be supported by reference to the bullet itself. The words "WORKS WITH LEGO" are in capital letters and are much larger and more prominent than the other statements in the bullet. Furthermore, although two bricks are depicted, the second - statement refers to "blocks" generally. Tyco labels packets containing not only bricks but also various other pieces as "Tyco Super Blocks". This suggests that "blocks" should be understood as referring to all the pieces in the box, and indeed in the Tyco range. The primary Judge did not refer in his reasons to the attempts by the respondent to construct a "trade dictionary" based on the appellants' own advertising. One such statement made by the appellants in reference to Lego and Duplo was that "all bricks and pieces fit together". Counsel for the respondent referred to several examples in evidence of Lego and Duplo pieces that did not fit together. Counsel also referred to the cross-examination of Mr A C Brown, who is Managing Director of the second appellant. After being confronted with the evidence of pieces that would not fit together, Mr Brown was asked:

"So, when you say that Duplo fits with Duplo, that must be understood that it depends really on which particular pieces you have got, using common sense? - -

I understand it to mean that."

Even if that answer could be seen as evidence of intention, then on the same grounds as Mr Grey's intention was irrelevant to interpreting Tyco's representation, Mr Brown's intention

would be irrelevant to Lego's statement. In any event, the	statements of Lego were not as broad as those of Tyco, and the
instances of impossibility of connection were fewer and more extreme than the evidence of Tyco's failure to connect with Lego .
So, one must return to the question of how consumers would interpret the statement "WORKS WITH LEGO". Counsel for the respondent argued that the absence of consumer evidence on this issue was fatal to the construction advanced by the appellants. In support of this contention, reference was made to WEA International Inc v Hanimex Cornoration Ltd suDra at 280, where it was said:

"Ultimately the issue is one for the Court, the ultimate question being whether what is complained of by the applicant amounts to conduct which is misleading or deceptive 'against the background of all surrounding circumstances': Taco CO of Australia Inc v Taco Bell Ptv Ltd (1982) 42 ALR 177 at 202. Nevertheless, there are some cases, and this case is one in my view, where submissions to the Court have diminished force unless they are enlivened by evidence as to the circumstances in which the allegedly misleading or deceptive conduct is communicated to those said to be prejudiced by it and the relevant habits and attitudes of such

persons. "

Those observations were not phrased in absolute terms. They were made in response to a submission that, by failing to state in certain advertisements for recording tapes that re- recording of certain sound recordings would infringe

case the appellants produced surveys, tendered product	copyright, the advertiser contravened S. 52. In the present
registration cards and called various witnesses to give oral evidence. I will not consider here the weight or admissibility of that evidence. The crucial issue is how Tyco's representation should be understood against the background of all the surrounding circumstances.
The overall "image" and "concept" of Lego is that all integers or elements fit together. Each element can be co~ected to the others, allowing the child to try any combination. Consumers would understand "WORKS WITH LEGO" against that background and hence would interpret those words as referring to all the pieces in the Tyco range. Moreover, as was stressed above, the marketing is directed towards children and those adults who buy toys for them. Such persons are not to be expected to go into the niceties of qualifying one statement by reference to another statement or to a picture. They would be more likely to expect one piece from a toy box to connect and operate with another if they were told those pieces "worked with" each other.
If it be accepted that the representation applies to all pieces, the question then arises as to the precise nature of the representation. The respondent submits that the primary Judge interpreted the words as representing identity or perfect compatibility. That is incorrect. As discussed
representing interchangeability, and I would respectfully above, the primary Judge interpreted the words "works with" as
adopt that interpretation.
Once the scope and nature of the representation is understood, the question then becomes one of judgment, namely whether the instances of pieces of Tyco being unable to connect with or perform in the same way as Lego are so significant that it could be said that the representation of interchangeability was misleading. The primary Judge considered this issue. His Honour had before him the evidence of Mr Jorgen Bruhn, who is Senior Vice President of Research and Development with Lego. This evidence involved "some hours in the witness box demonstrating that many Lego (or Duplo) and Tyco components did not connect at all or did not connect satisfactorily". His Honour recognised that some of these examples were faulted in cross-examination, but nevertheless accepted "the broad thrust" of M r Bruhnls evidence. He also referred to evidence from the product registration cards and oral evidence which supported the argument advanced by the appellants.
The primary Judge detailed the points of difference and incompatibility between Lego and Tyco products, assessed the significance of the quantity and quality of those differences, and decided that they were sufficiently significant to render misleading a representation of interchangeability with regard to the two products.

His Honour concluded (102 ALR at 429):

"In my opinion the totality of the evidence establishes that the case has been made out. The applicants are accordingly entitled to relief in respect of this part of their claims."

I agree. The cross-appeal should be dismissed.

Conclusions

1. co~vriaht Infrinoement

The pre-1969 drawings were designs capable of being
registered under the 1906 Desicms Act and by reason of S. 218
of the 1968 Act, copyright does not subsist in those drawings.

Copyright subsists in the post-1969 drawings. However, there was no infringement by Croner until the repeal of S. 77 of the 1968 Act in its original form became effective when the 1989 Act commenced on 1 October 1990. The appellants should have an injunction to restrain infringement by the respondent of the copyright in the post-1969 drawings. However the injunction should be suspended, with leave to the respondent to reopen its case before the primary Judge in the manner I have indicated.

But the appellants fail in their contention that the

primary Judge should have held that the respondent infringed

by importing and selling Tyco products in the period before 1	copyright within the meaning of ss. 37 and 38 of the 1968 Act
October 1990.
2. Passina off and Section 52 of the TP Act - ADDearance of
Products
The appellants also have not made good their contention that the appearance of the respondent's products and packaging is such that the respondent has misled or deceived, or is likely to mislead or deceive, consumers into believing the existence of a trade connection between Lego and Tyco.
However, the primary Judge erred in holding that the use of the words "Lego [or 'Duplo'] is a registered trademark of Interlego AG" was likely to misled or deceive consumers into believing the existence of an association between Tyco and Lego. Order 1 of the orders made by the primary Judge (reported 102 ALR at 435) should be set aside.
3. 3ection 52 of the TP Act - Remainina Issues The respondent is unsuccessful on its cross-appeal. The
representation that Tyco's product "WORKS WITH LEGO [or LEGO'S
DUPLO]" contravenes S. 52. However, the appellants fail in - L.
their contention that that conclusion is supported by evidence of discrepancies in clutch power and the grey adaptor brick.
The orders should provide for the setting aside of order (1) made below, and for the grant of an injunction to the
effect I have described. Otherwise the appeal and cross- appeal should be dismissed. In all the circumstances, the
appellants should pay the costs of the appeal and cross- appeal, including any reserved costs.

I certify that this and the preceding one hundred and eleven (111) pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Gummow.

Associate:

Date: 16 December 1992 / I

Counsel and Solicitors	Mr. R.J. Ellicott Q.C. and
for the Appellants:	Mr. A.J. Bannon instructed
by Blake Dawson Waldron.
Counsel and Solicitors	Mr. D.K. Catterns and
for the Respondent:	Miss S.J. Goddard instructed by Mallesons Stephen Jaques.
Dates of Hearing:	24, 25, 26, 27, 28, February, 19, 20 March 1992.
Date of Judgment:	16 December 1992