K-Aire Pty Ltd & Ors v Polyaire Pty Ltd
[2008] HCATrans 196
[2008] HCATrans 196
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Adelaide No A1 of 2008
B e t w e e n -
K-AIRE PTY LTD
First Applicant
RICHARD KEMPLEY COLEBATCH
Second Applicant
BRUCE VICTOR BENFIELD
Third Applicant
K-AIRE SALES PTY LTD
Fourth Applicant
K-AIRE WHOLESALE PTY LTD
Fifth Applicant
CONNECT AIRE PTY LTD
Sixth Applicant
T AND S MANUFACTURING PTY LTD
Seventh Applicant
and
POLYAIRE PTY LTD
Respondent
Application for special leave to appeal
KIRBY J
HAYNE J
CRENNAN J
TRANSCRIPT OF PROCEEDINGS
AT MELBOURNE ON FRIDAY, 23 MAY 2008, AT 9.42 AM
Copyright in the High Court of Australia
__________________
MR D.K. CATTERNS, QC: May it please the Court, I appear with my learned friend, MR M.V. McCARTHY, for the applicant. (instructed by Thomson Playford)
MR D.M. YATES, SC: May if please the Court, I appear with my learned friend, MR B.J. JENNER, for the respondent. (instructed by Lynch Meyer)
KIRBY J: Yes, Mr Catterns?
MR CATTERNS: Your Honours, our learned friend’s clients had a registered design under the Designs Act 1906. That gave a monopoly in the shape or configuration of the article. As the High Court said in Firmagroup v Byrne & Davidson, that gave them a monopoly in one particular individual and specific shape or configuration.
Your Honours, in our respectful submission, the way one proves design infringement is by comparing the representations of the design which are filed in the register and you derive from them an impression or a conception of features of shape or configuration with respect to which they have a monopoly. Then that is compared with, we submit, the accused article, because you have a monopoly of applying that shape or configuration to an article, or a fraudulent or obvious imitation of it. Your Honours, in our respectful submission, the article has to be tendered unless its shape or configuration is otherwise established sufficiently.
KIRBY J: That seems to be an evidentiary matter. Why do you say it has to be tendered? Is there some rule of law or practice that requires it uniformly in every case to be tendered or can it simply be litigated on the basis that there are sufficient analogies to the items which are tendered?
MR CATTERNS: Your Honour, that is why I said unless its shape or configuration or otherwise is sufficiently established.
KIRBY J: That will always be a matter of degree. That is a factual matter.
MR CATTERNS: Yes, your Honour. I accept you could perhaps prove design infringement by a video. Perhaps one no longer exists. It could be resurrected by proof, with a drawing, saying, this is what it did look like and so on, your Honour. But in this case the position is made worse, we submit, because there is no finding that articles of different size – and this is the crucial point – infringed because the articles of different size have a different shape or configuration with respect to these articles. I will make that good in a second.
CRENNAN J: Was that ever put at trial?
MR CATTERNS: Your Honour, this is not a point that arose at trial, we accept that. It is not because we were lying in wait, I accept it did not occur to us until after the High Court’s judgment.
HAYNE J: Is that not the principal difficulty you have got? The trial has been conducted on one basis, the appeal is conducted on the same basis and now you inject a new and late thought.
MR CATTERNS: I accept it is late, your Honour.
HAYNE J: But a new thought.
MR CATTERNS: Yes, your Honour, but the question as to the conduct of the trial – I do not accept that the trial was conducted on that basis.
HAYNE J: I understand that, but both the trial judge and the Full Court have found, have they not, to the contrary of that contention from your side of the record?
MR CATTERNS: They have, your Honour, but that creates a difficulty, I submit, for the administration of justice because they have found that not from the pleadings, not from any concessions on the transcript, not from any other piece of evidence, but from what their Honours refer to as a common assumption. Your Honours, we deny that common assumption. We accept that it did not occur to us, which is a completely different question from a common assumption, and, we submit, onus being on our friends to prove infringement, that is their problem and that we are entitled to take the forensic landscape as we now see it, or as it now is, post the High Court’s judgment on the first infringement case. That is why we respectfully submit the reasoning of both the Full Court and his Honour Justice Besanko is deeply flawed because there is no basis for the common assumption. I will come to it, your Honours, but I ‑ ‑ ‑
CRENNAN J: Is not one problem that shape and configuration may not vary with size?
MR CATTERNS: They might not, your Honour.
CRENNAN J: So that is a problem, is it not, because you would expect that to be raised by a respondent to an infringement action, a defendant, if it were the case?
MR CATTERNS: Your Honour, if our friends had tendered other articles, no doubt the experts would have opined that the different shape or configuration involved nevertheless came within the design. We would have cross‑examined them about that, as we did about the one that was in evidence.
CRENNAN J: But there is no evidence anywhere that the shape or configuration did vary with the size.
MR CATTERNS: Your Honour, there is no question it does, because they have different numbers of blades. There is evidence of that. That is configuration. It is clear that his Honour is only referring to the specific exhibits because he refers to ours as having five blades and the five blade one was the one which was tendered, whereas other drawings were in evidence showing six blades and different sizes.
KIRBY J: Can I cut to the chase?
MR CATTERNS: Yes, your Honour.
KIRBY J: You had a trial, you had a chance to raise this matter, you did not, you accepted that was because it did not occur to you, you have had one run up the ladder, you have come to the High Court of Australia ‑ ‑ ‑
MR CATTERNS: Against our wishes, your Honour.
KIRBY J: You are now back to the primary judge, and it just does not look like a matter that should come here again. So what is the importance of this either in terms of general legal principle or justice for your client? If you can lift yourself up yet once again, then maybe you will do it, but it just does not look like the sort of thing we get involved in. This is a barney that you are continuing to have and you will not give up and that is admirable, but enough is enough.
MR CATTERNS: Your Honour, first, we were not the ones who sought and obtained special leave. We won in the Full Court and lost in the High Court.
KIRBY J: You are still smarting. Courage and determination are very good things at the Bar table. That is something that we all know and admire, but you have to come to the end of the line eventually. Now, why is this important? Why is this important enough to put somebody else out of the list of the High Court, effectively, and give you a second run at it when you did not raise the thing at the trial?
MR CATTERNS: Your Honour, it was not raised at trial – I use the passive voice – because it was not physically in evidence. His Honour’s first orders ‑ ‑ ‑
KIRBY J: A number of very clever judges have said there was a common assumption.
CRENNAN J: You know the different sizes of KA1 and KA2.
MR CATTERNS: No, your Honour, KA1 and KA2 are the same sizes. KA1 was the one we did before we got the letter of demand, then we took off one of the linking bars. None or virtually none were sold of KA1. KA2 is the relevant size. They are both the same size. Your Honours, I submit there is a special leave question in here; first of all, because decisions should not be made on the basis of a common assumption outside the record, I submit, and, secondly – and this is without being a bad loser in the main case, which your Honours are kindly not accusing me of ‑ ‑ ‑
KIRBY J: No, no. I mean, I do like to see determination, courage and persistence, but in the end it wears us all down a bit.
MR CATTERNS: I wish your Honour had also said grit. But, your Honours, we respectfully submit that the point we raise raises again – I do not say there is a conflict between the Full Court decision in this case and the Firmagroup v Byrne & Davidson Case, but in that Firmagroup Case, which had those little locks for garage roller doors, the court held there was no infringement, applying Malleys v Tomlin, which was overcome in the present case, but it said so because the articles have one specific individual appearance. Your Honours, it cannot be said that the other articles of different sizes have the same specific individual appearance; they do not. They have different numbers of blades. Because they are different sizes – the sides are all the same depth but one will be wider than the other, so therefore it will have different proportions – that means a different shape. There are different numbers of blades with little slots in the sides and the shape of the holes in the side were regarded as important and, your Honours, we submit that makes a difference. The point is, we say, one cannot determine by osmosis that articles not in evidence ‑ ‑ ‑
KIRBY J: Essentially your point is that, insofar as it has been said below that there was a common assumption, there is no factual foundation whatever and the judges who have made that assumption have made it out of their own minds and not on the basis of the records?
MR CATTERNS: Yes, your Honour.
KIRBY J: And that is a matter of fundamental justice and that you have been denied the chance to confront an issue because it was never in evidence and therefore you never did and that is not your fault? It is simply a mistake on the part of the judges below?
MR CATTERNS: Yes, your Honour. The judges cannot refer to ‑ ‑ ‑
KIRBY J: As I understand it, you say you did not anticipate the steps that their Honours have taken simply because the particular design was not in evidence and that that was what you would have expected.
MR CATTERNS: Yes, your Honour. As I say, I do not say I was lying in wait and thinking, is it not wonderful my learned friend hasn’t tendered the articles. I accept that this occurred to us post‑judgment ‑ ‑ ‑
KIRBY J: One often sees that, or we think we see it, in criminal trials but surely not intellectual property trials.
MR CATTERNS: I think between my learned friend and I probably I would have said something had it occurred to me.
CRENNAN J: What was the allegation of infringement? Was it tied to KA1 and KA2?
MR CATTERNS: Your Honour, that is the pleading point that the Full Court refers to. Can I take your Honours to that. It is conveniently in the Full Court’s judgment which begins at 148 – I am sorry, your Honour, my answer is yes, but may I take the Court to it. It is at 148 and 149. At 149 their Honours refer to “The pleadings”, paragraph 26, which says we have kept articles “to which the design or an obvious or fraudulent imitation of it has been applied”. Then on the next page, 150, in paragraphs (c) and (d), the Full Court has added in brackets some things.
CRENNAN J: Paragraph (a) refers to the outlets in all the sizes, does it not?
MR CATTERNS: Well, your Honour, except that they are then referred to as the “first K‑Aire outlet and the second K‑Aire outlet”, and it descends in (c) to “An example [P3] of the first K‑Aire outlet”, and in (d), “An example [P4]”. We do not take the Full Court as regarding that as determining the present question, but as merely being consistent with what his Honour Justice Besanko did.
HAYNE J: But the argument ultimately, Mr Catterns, that you advance is necessarily circular, is it not? The circulatory applies in the fact that you say that the pleading properly understood confined the allegation to claims in respect of articles of the size that were ultimately to be tendered in evidence, that is, the pleading was not confined to articles of the same general shape and configuration or creating the same impression to the eye. The finding below in the second round of litigation is that the other sizes do create the same general impression and are we not therefore looping back in a perfect symmetry of circulatory in your argument?
MR CATTERNS: I would respectfully submit not, your Honour, because I do not read the words “the same overall impression” in any of those judgments, your Honours. This referred to two specific examples, P3 and P4. They became exhibits P3 and P4. The experts only looked at exhibits P3 and P4 and his Honour’s findings only related to those. May I make that ‑ ‑ ‑
CRENNAN J: Was the evidence that the P3 and P4 examples were examples of something sold in four different sizes?
MR CATTERNS: Yes, your Honour, there were drawings that showed that there were different sizes.
CRENNAN J: That is right, and the drawings show a different number of blades, do they not?
MR CATTERNS: They do, your Honour.
CRENNAN J: So that was before his Honour?
MR CATTERNS: I beg your pardon?
CRENNAN J: That was before his Honour, that you had allegations about shape and configuration in terms of drawings which showed outlets which had differing numbers of blades, five or six.
MR CATTERNS: Yes, your Honour, that is true. But there is not a word in his Honour’s findings in the main judgment on infringement that relate to anything other – I am sorry, on his Honour’s consideration of infringement. He mentions that we had numbers of blades as part of the narrative, including our copying, but, your Honours, he does not say a word about that on infringement. May I just quickly go to that.
Your Honours, at 71 of the book, looking at the question of infringement, at paragraph 348 his Honour says “there are a number of differences between RD2 and KA1”, and then he lists them. May I just go to the end of it, your Honours, the last sentence, “Finally, RD2 has six blades whereas KA1 has five”. So his Honour there can only be referring to exhibit P3, which was the KA1 that had five blades.
Similarly, your Honours, in his actual finding on infringement at page 74, paragraph 361, he is now referring to the differences – I accept saying that are slight – and item 7 is, “RD2 shows six blades” – that is the design – “whereas KA1 has five blades”. So, your Honours, we respectfully submit that is all his Honour considered. The drawings were in there as part of the narrative and helped his Honour make his findings about copying, but there were no findings whatsoever in relation to any other sizes or shapes.
Your Honours, the Designs Act contemplates certain articles where size does not matter at all; for example, aluminium extrusions. There is a specific section, section 18, that allows for that, or in the new Designs Act, recurring patents. Of course, size does not matter in that case but, your Honours, the nub of our case is that this is a case of a different shape or configuration when there are different articles. There were no findings, there could not have been any findings, because nobody gave opinions of
the kind that I have conceded could be sufficient when his Honour the presiding judge first raised it.
Your Honours, we respectfully submit that the question of the mode of proof of designs is significant. The question of the design principle, one particular specific and individual appearance, is significant, and we also respectfully submit that to down us on a common assumption not appearing on the record raises questions going to the administration of justice. May it please the Court.
KIRBY J: Yes, thank you. Yes, Mr Yates.
MR YATES: Your Honours, we submit, with respect, that the special leave question that has been posited does not arise on the facts of the case. The applicant’s submissions ‑ ‑ ‑
KIRBY J: The complaint is that the common assumption does not arise on the facts of the evidence.
MR YATES: Your Honour, there was compelling evidence, we submit, that there was a common assumption. Your Honour, the learned primary judge referred to the fact that at the time after he made his findings on infringement and the orders contemplated came to be debated, affidavits were filed by the then defendants to the effect that the making of orders would significantly interfere with their business. The primary judge found that the purport of those affidavits concerned the outlets in their four sizes and there was no repeal against that finding of fact by his Honour.
The second matter was that at the same time submissions were made concerning the disastrous effect it would have on the business if the dies were destroyed, which was one of the orders that were being sought and, once again, those submissions were directed to the dies relating to the four sizes of the outlet. So, your Honours, at the very time, just immediately prior to the making of the orders, there is clear evidence that the then defendants well understood what had been determined at trial and adjudicated upon by his Honour. They were asking his Honour to stay the orders because it would have a disastrous effect on the business, and they were asking his Honour to stay the orders insofar as it concerned the destruction of the dies because if they had been successful in the appeal, the dies would have been gone. So there is absolutely cogent evidence, your Honour, as to the understanding of the defendants at the time, immediately prior to the time the orders were made.
Then, if more were needed, after the orders were made and the stay was granted, the then defendants were obliged to file and serve affidavits dealing with the sales that they had been making in the meantime and those affidavits dealt with the sales of the article in each of its four sizes. So we use that of course not to construe the orders but as evidence of the fact of the contemporaneous state of mind of the defendants at or about the time the orders were made. That attitude, your Honours, only changed after the appeal brought by my clients to this Court were successful and thereafter when orders were reinstated for the filing of affidavits showing sales, they were then confined to articles of the one size.
So, your Honours, there was compelling evidence, in our respectful submission, of this common assumption. The learned primary judge in his reasons on this aspect was emphatic about it. There was no doubt, if I may say so, in our minds, as to what the trial was about and how it was conducted. And so the special leave question does not arise, your Honours, because there was in evidence in each case an example of the design that had been applied to the accused articles. Exhibit P3 was tendered as an example of the design which was applied to the KA1 outlet and its four sizes. Exhibit P4 was tendered as an example of the design that was applied to the KA2 outlet in its four sizes.
KIRBY J: What do you say to the suggestion by Mr Catterns that you should have tendered all of the relevant designs that you were relying on? Is there some practice with which I am unfamiliar that would require that? Is there a universal practice?
MR YATES: I am not aware of any such practice at all, your Honours.
CRENNAN J: The drawings were in evidence in any event.
MR YATES: The drawings were in evidence in any event, but the design is the relevant concession of shape and figuration. It was illustrated on the article. Size itself did not make any difference. So that the article that was tendered as P3 referrable to the design applied to the KA1 articles showed that shape and configuration and, additionally, his Honour had the technical drawings in evidence before him. There was no doubt that this was a case about these articles in their four sizes.
HAYNE J: And the difference in numbers of blades appears to have been dealt with explicitly in paragraph 361 of the reasons.
MR YATES: That is so, your Honour.
HAYNE J: Where a difference from six to five was seen as ‑ ‑ ‑
MR YATES: “Slight” I think was his Honour’s word.
HAYNE J: Slight, yes, differences which would not prevent finding obvious imitation.
MR YATES: That is so, your Honour. His Honour obviously considered the numbers of blades but regarded that as really being a matter that did not impact in any significant way on his Honour’s conception of what the shape or configuration was for the registered design. Indeed, at paragraph 376 on page 77 of the application book ‑ ‑ ‑
KIRBY J: What is in 376 that you rely on?
MR YATES: It is in the middle of that paragraph, your Honour, at about line 2636:
Thirdly, there are substantial similarities between Mr Rogers’ design and RD2. The similarities between KA1 and RD2, particularly in relation to the snap fit mechanism, the control bars and the blade ends including the spigots, are obvious. No other outlet director part similar in respect of those features to KA1 or RD2 was identified.
And then, going down to 378, in the middle of that paragraph, his Honour said:
There are differences, the most significant of which are the absence from KA1 of the chamfered lip and the vertical ribs on the outside of the frame. However, the features of shape and configuration which give RD2 its distinctive appearance, namely, the snap fit mechanism, the control bars and the blade ends including the spigots (despite small differences) have been copied.
So that indicates to your Honours the ‑ ‑ ‑
KIRBY J: I think you have dealt with the matter that was raised by Mr Catterns, so we do not need further assistance.
MR YATES: Thank you, your Honour.
KIRBY J: Anything in reply, Mr Catterns?
MR CATTERNS: Your Honours, just two brief matters. The order that his Honour made initially is at page 131 and order 2 was:
A fraudulent imitation . . . has been applied to the articles which are respectively exhibits P3 and P4 –
that is two specific articles.
KIRBY J: But that does not meet the point of reasoning by analogy and the way the case was run. It simply is the foundation for that.
MR CATTERNS: Yes, your Honour, that is right, with respect. And then your Honours see the injunction is in the form of “the infringing articles”, which I accept begs the question. But, your Honours, the problem is made stark by the new order which is at 125 – this is the order that we are in effect appealing from – because, your Honours, at page 125 the correct or amended orders has in paragraph 2 a declaration and in 3, though, it says we be restrained from selling any article “which, regardless of their size, have the shape and configuration”. Your Honour, our point is they have different shape or configuration with size.
CRENNAN J: Does that mean you can sell with impunity possibly, if you are right?
MR CATTERNS: Maybe, your Honour, but it brings us back all over again, I submit. Your Honours, just finally, in relation to the question of the practice your Honour asked, of course that is what the High Court did – that is, compare the article with the design in the present case – and it is what the High Court did in the Firmagroup v Byrne &Davidson Case. You compare the registered design with the accused article.
KIRBY J: Yes, but you have not really shown us any authority that says that there is a universal practice that you have to tender each and every design that you complain of and if you do not show that, then it is open to parties to argue by analogy without presenting each and every design physically. Here we have the drawings and your thesis of a universal principle would, one would think, lead to a lot of unnecessary evidence in many cases. Unless you can establish it as a universal principle, this type of litigation is just a case on the facts.
MR CATTERNS: Your Honour, I accept you could prove it in a different way, but my submission was that on this record it did not. There is no submission in the transcript and there is no finding that one could reason up from the drawings to hold that other size is infringed. May it please the Court.
KIRBY J: The reasons of the Court and the orders of the Court will be pronounced by Justice Crennan.
CRENNAN J: In proceedings alleging infringement of a registered design orders were made by the primary judge, Justice Besanko, restraining the defendants, the applicants here, from engaging in certain conduct by reference to articles tendered in evidence as Exhibits P3 and P4.
Amending orders made subsequently encompassed articles having the shape and configuration of P3 or P4, regardless of their size. Concurrent findings were made by both the primary judge and the Full Court of the Federal Court, Justices Finn, Gyles and Bennett, that the trial was conducted on the basis of common assumption that P3 and P4 were examples of allegedly infringing articles identified as the first K‑Aire outlet and the second K‑Aire outlet which were each produced and sold by the applicants in four different sizes.
In seeking special leave to appeal, the applicants have contended that the articles of different sizes were of a different shape or configuration and that there was no basis for the primary judge to hold that articles of different sizes were infringing articles unless they were tendered in evidence. These contentions were not advanced before the primary judge.
We see no reason to doubt the correctness of the Full Court’s decision that the recasting of orders by the primary judge permissibly reflected a common assumption at the trial that the size of allegedly infringing articles was not material and that P3 and P4 were examples of the first K‑Aire outlet and the second K‑Aire outlet, the latter articles being alleged to have the shape and configuration protected by the registered design. Special leave is refused with costs.
AT 10.12 AM THE MATTER WAS CONCLUDED
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