LED Technologies Pty Ltd v Elecspess Pty Ltd

[2008] FCA 1941

FEDERAL COURT OF AUSTRALIA

LED Technologies Pty Ltd v Elecspess Pty Ltd [2008] FCA 1941

INTELLECTUAL PROPERTY – Designs – whether Designs Act 2003 (Cth) applies to extraterritorial conduct – whether alleged infringer’s subsequent registration of designs in respect of her own products is relevant to the questions of infringement or validity of the allegedly infringed design –whether a design that combines various features, each of which can be found in the prior art base when considered individually but not collectively in any one particular piece of prior art, is capable of being distinctive – whether infringement analysis is undertaken by comparing allegedly infringing product with registered design or with a product embodying the registered design – authorship – who is an author of a design – whether an independent contractor can be a co-author of a design – design register – what constitutes the design register – whether a design will be invalid for lack of clarity if the relevant features appear from the registered representations without necessity for unreasonably prolonged or complicated series of deductions – substantial similarity as judged objectively by hypothetical “informed user” – whether “informed user” is more informed than an average user but less informed than a expert – whether party has duty to check the design register where the product embodying the design carries a registration notice and the substantial similarity of the allegedly infringing, later-designed product permits the inference that the party had access to the product embodying the registered design and did or should have seen the registration notice – damages – lost sales – whether infringer’s sales may be claimed by design owner on a one-to-one basis in calculating damages

EVIDENCE – judicial notice – whether court may take judicial notice of design representations displayed on IP Australia website – whether circulars published by the Administrator of Vehicle Standards constitute legislative instruments of which the court may take judicial notice – whether substantial similarity of two products permits an inference that designer of later created product had reference to earlier-created work – whether court may take judicial notice of matter requiring basic computer literacy

TRADE PRACTICES – accessorial liability – actual knowledge – whether representation of compliance with law may be misleading where it is based upon a commonly shared mistake of law – damages – lost sales – whether sales lost by virtue of defendant’s misleading conduct greater than sales lost by virtue of defendant’s infringement

WORDS AND PHRASES – “Design Register,” “informed user,” “primary infringer,” “secondary infringer”

Acts Interpretation Act 1901 (Cth) s 21
Designs Act 1906 (Cth) ss 17, 19
Designs Act 2003 (Cth) ss 5, 7, 13, 15, 16, 19, 39, 71, 75, 79, 93, 111, 112, 113, 118, 120
Evidence Act 1995 (Cth) ss 143, 144
Motor Vehicle Standards Act 1989 (Cth) ss 5, 7, 9, 10, 14, 18, 22, 23, 41
Registered Design Act 1949 (UK)
Trade Practices Act 1974 (Cth) ss 52, 53, 65C

Vehicle Standard (Australian Design Rules) 2005 (Cth) rr 1/00, 6/00, 49/00
Council Regulation (EC) No. 6/2002
Designs Regulations2004 (Cth) reg 4
Motor Vehicle Standards Regulations 1989 (Cth) reg 4

Explanatory Memorandum to the Designs Bill 2002 (Cth)

United Nations Economic Commission for Europe Regulation No.23/00 “Uniform Provisions Concerning the Adoption of Reversing Lamps for Power Driven Vehicles and Their Trailers”  

ACCC v Hercules Iron Pty Ltd [2008] FCA 1182 cited
ACCC v Kaye [2004] FCA 1363 cited
ACCC v MHG Plastic Industries Pty Ltd [1999] ATPR 41-712 cited
Adidas-Solomon AG v Turner (2003) 58 IPR 66 cited
Allen Manufacturing Co Pty Ltd v McCallum & Co Pty Ltd (2001) 53 IPR 400 cited
Apple Computer Inc (2007) 74 IPR 164 referred to
Application by Pauline Ann Walton to invalidate UK Registered Design in the name of Zap Ltd [2007] ECDR 10 cited
Astrazeneca Pty Ltd v GlaxoSmithKline Australia Pty Ltd [2006] ATPR 42-106 cited
.au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 applied
Australian Competition and Consumer Commission v Telstra (2004) 208 ALR 459 cited
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 cited
Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 cited
Chris Ford Enterprises Pty Ltd v BH & JR Badenhop Pty Ltd (1985) 7 FCR 75 applied
Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 cited
Dart Industries Inc v Decor Corporation Pty Ltd (1989) 15 IPR 40 cited
Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2008) 76 IPR 83 cited
Enzed Holdings Ltd v Wynthea Pty Ltd (1984) 57 ALR 167 cited
Fencott v Muller (1983) 152 CLR 570 cited
Finucane v New South Wales Egg Corp (1988) 80 ALR 486 cited
Icon Plastics Pty Ltd [2007] ADO 2 referred to
J Choo (Jersey) Ltd v Towerstone Ltd [2008] FSR 19 referred to
Jones v Dunkel (1959) 101 CLR 298 cited
Karen Millen Ltd v Dunnes Stores Ltd [2008] ECDR 11 cited
LJ Fisher & Company Ltd v Fabtile Industries Pty Ltd (1978) 1A IPR 565 followed and applied
Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2007) 235 ALR 202 cited
Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 applied
MHG Plastic Industries v ACCC (2000) ATPR (Digest) 46-206 applied
Mentmore Manufacturing v National Merchandising Manufacturing (1978) 89 DLR (3d) 195 discussed
National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] ATPR 42-000 cited
Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 cited
Occupational and Medical Innovations Limited v Retractable Technologies Inc (2007) 73 IPR 312 referred to
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 cited
Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 discussed
Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 cited
Proctor & Gamble Company v Reckitt Benckiser (UK) Ltd (2007) 73 IPR 605 not followed
Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd (2008) 166 FCR 358 discussed
Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589 cited
Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588 discussed and followed
Rolawn Lawn Ltd v Turfmech Machinery Ltd [2008] EWHC 989 Pat cited
Rural Press Ltd v ACCC (2002) 118 FCR 236 cited
Saraswati v The Queen (1991) 172 CLR 1 cited
Sony Computer Entertainment Australia Pty Ltd v Stirling [2001] FCA 1852 cited
Quinlivan v ACCC (2004) 160 FCR 1 cited
Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 referred to
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 cited
Woodhouse UK plc v Architectural Lighting Systems [2006] RPC 1 approved
Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460 cited
World of Technologies (Aust) Pty Ltd v Tempo (Aust) Pty Ltd (2007) 71 IPR 307 cited
Yorke v Lucas (1985) 158 CLR 661 cited

Australian Law Reform Commission, Report No 74, Designs (1995)

LED TECHNOLOGIES PTY LTD (ACN 100 887 474) v ELECSPESS PTY LTD (ACN 104 535 597), ADVANCED AUTOMOTIVE AUSTRALIA PTY LTD (ACN 005 955 948), REN INTERNATIONAL PTY LTD (ACN 115 026 438), OLSEN INDUSTRIES PTY LTD (ACN 098 385 730), PETER OWEN MORRISON, ANTHONY JAMES KELLER and LAWRENCE ALFRED ARMSTRONG

VID 316 of 2007

GORDON J
18 DECEMBER 2008
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 316 of 2007

BETWEEN:

LED TECHNOLOGIES PTY LTD (ACN 100 887 474)
Applicant

AND:

ELECSPESS PTY LTD (ACN 104 535 597)
First Respondent

ADVANCED AUTOMOTIVE AUSTRALIA PTY LTD (ACN 005 955 948)
Second Respondent

REN INTERNATIONAL PTY LTD (ACN 115 026 438)
Third Respondent

OLSEN INDUSTRIES PTY LTD (ACN 098 385 730)
Fourth Respondent

PETER OWEN MORRISON
Fifth Respondent

ANTHONY JAMES KELLER
Sixth Respondent

LAWRENCE ALFRED ARMSTRONG
Seventh Respondent

AND BETWEEN:

ELECSPESS PTY LTD (ACN 104 535 597)
First Cross-Claimant

REN INTERNATIONAL PTY LTD (ACN 115 026 438)
Second Cross-Claimant

OLSEN INDUSTRIES PTY LTD (ACN 098 385 730)
Third Cross-Claimant

PETER OWEN MORRISON
Fourth Cross-Claimant

ANTHONY JAMES KELLER
Fifth Cross-Claimant

LAWRENCE ALFRED ARMSTRONG
Sixth Cross-Claimant

and:

LED TECHNOLOGIES PTY LTD (ACN 100 887 474)
First Cross-Respondent

ANTHONY OTTOBRE
Second Cross-Respondent

JUDGE:	GORDON J
DATE OF ORDER:	18 DECEMBER 2008
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.By 4:00pm on 23 January 2009, the parties confer and jointly file short minutes of final orders giving effect to these reasons for decision; provided that, if the parties are unable to agree, they are to submit a joint statement by 4:00pm on 23 January 2009 identifying:  (1) the point(s) of agreement; (2) the point(s) of disagreement; and (3) the respective positions of the parties on the point(s) of disagreement.

2.If necessary, the proceedings be listed for directions at 9:30am on 28 January 2009.

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

The text of entered orders can be located using eSearch on the Court’s website. 

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 316 of 2007

BETWEEN:

LED TECHNOLOGIES PTY LTD (ACN 100 887 474)
Applicant

AND:

ELECSPESS PTY LTD (ACN 104 535 597)
First Respondent

ADVANCED AUTOMOTIVE AUSTRALIA PTY LTD (ACN 005 955 948)
Second Respondent

REN INTERNATIONAL PTY LTD (ACN 115 026 438)
Third Respondent

OLSEN INDUSTRIES PTY LTD (ACN 098 385 730)
Fourth Respondent

PETER OWEN MORRISON
Fifth Respondent

ANTHONY JAMES KELLER
Sixth Respondent

LAWRENCE ALFRED ARMSTRONG
Seventh Respondent

AND BETWEEN:

ELECSPESS PTY LTD (ACN 104 535 597)
First Cross-Claimant

REN INTERNATIONAL PTY LTD (ACN 115 026 438)
Second Cross-Claimant

OLSEN INDUSTRIES PTY LTD (ACN 098 385 730)
Third Cross-Claimant

PETER OWEN MORRISON
Fourth Cross-Claimant

ANTHONY JAMES KELLER
Fifth Cross-Claimant

LAWRENCE ALFRED ARMSTRONG
Sixth Cross-Claimant

and:

LED TECHNOLOGIES PTY LTD (ACN 100 887 474)
First Cross-Respondent

ANTHONY OTTOBRE
Second Cross-Respondent

JUDGE:	GORDON J
DATE:	18 DECEMBER 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

INTRODUCTION

1. Light emitting diodes (“LEDs”) were, at the time of their invention, revolutionary.  LEDs create virtually no heat and, as a result, use about one-tenth the power of incandescent light globes.  LEDs do not use a filament that can burn out or break and good quality LED lights can last for approximately 100,000 hours of continuous use.  Unsurprisingly, the design, manufacture, importation and sale of LEDs in Australia is a competitive business.

2. These proceedings concern two designs of rear combination LED lights (Registered Design No.302359 – dual lens and No.302360 – triple lens) (“the Designs”) sold by the Applicant, LED Technologies Pty Ltd (“LED Tech”), under the name “LED autolamps” and registered under the Designs Act 2003 (Cth) (“the 2003 Designs Act”). The priority date for each Design is 22 June 2004. Each Design has the following statement of newness and distinctiveness:

   Seperate (sic) clip in lenses.  Base to take a variety of 2, 3 or 4 combination lenses for stop, tail, indicator, reverse LED lenses, no visible screws.

   Representations of each of the Designs are set out in Annexure A.  The Designs are not dimensioned.

3. The LED Tech rear combination lights are manufactured in three sizes:  80mm, 100mm and 125mm.  The first batch of dual lenses was produced by LED Tech’s Chinese manufacturer (referred to throughout these proceedings for reasons of business confidentiality simply as “M”) in September 2004 and sold in Australia in September 2004.  The triple combination lamps were first sold in Australia in April / June 2005.  LED Tech’s range of rear combination lamps includes 80BAR, 80BARR, 80BARW, 100BARR, 100BARW, 125BARR and 125BARW.  The “A” stands for amber, the “R” for red and the “W” for white. 

4. LED Tech contends that the First to Fourth Respondents (“the Corporate Respondents”) infringed the Designs and, further, by their conduct, contravened ss 52, 53 and 65C of the Trade Practices Act 1974 (Cth) (“the TPA”). LED Tech contends that the Sixth and Seventh Respondents (“the Directors”) authorised, directed and, further or alternatively, procured the conduct of the Third and Fourth Respondents. LED Tech no longer seeks relief against the Fifth Respondent, Mr Morrison.

5. By cross-claim, the Respondents (except for the Second Respondent, Advanced Automotive Australia Pty Ltd) seek revocation of the Designs on three bases. First, pursuant to s 120(1) of the 2003 Designs Act, the cross-claimants contend the Designs are invalid as the representations are unclear and the monopoly lacks certainty. Secondly, pursuant to s 93(3)(c) of the 2003 Designs Act, the cross-claimants contend that LED Tech is not solely entitled to registration of the Designs because another person also has a co-entitlement and finally, pursuant to s 120(1) of the 2003 Designs Act, the cross-claimants contend the Designs are not new and distinctive but are substantially similar in overall impression to a design that forms part of the prior art base.

6. The cross-claimants also seek relief against LED Tech in relation to what they describe as unjustified threats of design infringement and other relief against LED Tech and Mr Ottobre (a director of LED Tech) in relation to allegedly misleading statements made by LED Tech on its website, in a circular sent to 5,000 prospective customers and on its packaging for its lights.

7. As these reasons for decision will demonstrate:

   (1)there is no basis for revocation of the Designs.  The Designs are not invalid.  The representations are clear and the Designs are distinctive.  The monopoly does not lack certainty.  Moreover, LED Tech is entitled to registration of the Designs.  No other person has a co-entitlement to registration; 

   (2)the Corporate Respondents infringed the Designs; 

   (3)the Corporate Respondents contravened ss 52 and 53 of the TPA, but not s 65C, by representing that their own LED lights were approved or compliant with product safety standards known as the Australian Design Rules (“ADRs”);

   (4)the Directors authorised, directed and further or alternatively procured the conduct of the Third Respondent, Ren International Pty Ltd (“Ren”), and the Fourth Respondent, Olsen Industries Pty Ltd (“Olsen”), in relation to the infringement of the Designs, but were not knowingly concerned in the contraventions of ss 52 and 53 of the TPA;

   (5)LED Tech is entitled to recover damages for the infringement of the Designs but is not entitled to additional damage for contraventions of ss 52 and 53 of the TPA; and

   (6)the cross-claims alleging unjustified threats of design infringement and other relief against LED Tech and Mr Ottobre in relation to allegedly misleading statements made by LED Tech lack merit and must be dismissed.

8. These reasons for decision are structured as follows:

Contents	Par (s)
A	2003 Designs Act	[9] – [15]
B	Authorship and Revocation	[16] – [31]
C	Alleged Invalidity of the Designs	[32] – [50]
D	New and Distinctive	[51] – [67]
E	Infringement	[68] – [83]
F	Affirmative Defence: s 75(2) of the 2003 Designs Act	[84] – [94]
G	Relief	[95] – [102]
H	Trade Practices Claims Against the Corporate Respondents	[103] – [166]
I	Directors’ Liability?	[167] – [180]
J	Additional Cross Claims Against LED Tech and Mr Ottobre	[181] – [200]
K	Orders	[201] – [202]

A.       2003 DESIGNS ACT

1. The relevant provisions of the 2003 Designs Act are not in dispute.  What is disputed is the construction and application of those provisions to the facts. 

2. “Design” in relation to a product is defined in s 5 of the 2003 Designs Act to mean “the overall appearance of the product resulting from one or more visual features of the product”. The phrase “visual feature”, in relation to a product, is defined in s 7(1) of the 2003 Designs Act to include “the shape, configuration, pattern and ornamentation of the product”. Section 7(2) goes on to provide that “a visual feature may, but need not, serve a functional purpose” and that the following are not visual features of a product (s 7(3)):

   (a) the feel of the product;

   (b) the materials used in the product;

   (c) in the case of a product that has one or more indefinite dimensions:

   (i) the indefinite dimension; and

   (ii)if the product also has a pattern that repeats itself - more than one repeat of the pattern.

3. Chapter 2, Part 4 of the 2003 Designs Act deals with the validity of registrable designs.  “A design is a registrable design if the design is new and distinctive when compared with the prior art base for the design as it existed before the priority date of the design”: s 15(1) of the 2003 Designs Act. The “prior art base” for a design is defined in s 15(2) as consisting of:

   (a) designs publicly used in Australia; and

   (b) designs published in a document within or outside Australia; and

   (c) designs in relation to which each of the following criteria is satisfied:

   (i) the design is disclosed in a design application;

   (ii) the design has an earlier priority date than the designated design;

   (iii) the first time documents disclosing the design are made available for public inspection under section 60 is on or after the priority date of the designated design.

4. A design is new “unless it is identical to a design that forms part of the prior art base for the design”: s 16(1) of the 2003 Designs Act (emphasis added). A design is distinctive “unless it is substantially similar in overall impression to a design that forms part of the prior art base for the design”: s 16(2) (emphasis added). The emphasised language is important because it demonstrates that newness and distinctiveness are to be assessed not by comparing the design in question to the prior art base as a whole but by comparing it individually to each relevant piece of prior art. Put another way, a design that combines various features, each of which can be found in the prior art base when considered as a whole but not in any one particular piece of prior art, is capable of being new or distinctive. In addition, subject to s 15(2)(c) of the 2003 Designs Act, the newness or distinctiveness of a design is not affected by the mere publication or public use of the design in Australia on or after the priority date of the design or by the registration of another design with the same or a later priority date: s 16(3).

5. Section 17 prescribes the things that are to be disregarded for the purpose of deciding whether a design is new and distinctive. There is, however, no claim in the present case that the Designs are identical to any prior art (ie not new); rather, the respondents claim that the Designs are substantially similar to the prior art (ie not distinctive). Section 19 prescribes the factors to be considered in assessing substantial similarity in overall impression. It provides that:

   (1) If a person is required by this Act to decide whether a design is substantially similar in overall impression to another design, the person making the decision is to give more weight to similarities between the designs than to differences between them.

   (2) The person must also:

   (a) have regard to the state of development of the prior art base for the design; and

   (b) if the design application in which the design was disclosed included a statement (a statement of newness and distinctiveness) identifying particular visual features of the design as new and distinctive:

   (i) have particular regard to those features; and

   (ii) if those features relate to only part of the design - have particular regard to that part of the design, but in the context of the design as a whole; and

   (c) if only part of the design is substantially similar to another design, have regard to the amount, quality and importance of that part in the context of the design as a whole; and

   (d) have regard to the freedom of the creator of the design to innovate.

   (3) If the design application in which the design was disclosed did not include a statement of newness and distinctiveness in respect of particular visual features of the design, the person must have regard to the appearance of the design as a whole.

   (4) In applying subsections (1), (2) and (3), the person must apply the standard of a person who is familiar with the product to which the design relates, or products similar to the product to which the design relates (the standard of the informed user).

   (5) In this section, a reference to a person includes a reference to a court.

1. It will be necessary to return to consider these and other provisions of the 2003 Designs Act in greater detail later in these reasons for decision.  It is sufficient at this point to note that the express provisions of the Act are a complete answer to the Corporate Respondents’ submission that because some of them had “registered designs of their own which reflect the commercial products that they sell” it provides a “further indicator that there is sufficient distinction between the [Corporate Respondents’] products and the [Designs] to avoid infringement”.  In fact, it is another entity based in Mauritius and associated with the Sixth Respondent, Anthony James Keller (“Keller”), Prime Global Brands Ltd, which on 9 October 2006 lodged applications for registration of designs for a single, double and triple tail light assembly which were subsequently accepted (“the Condor Designs”).  Representations of each Condor Design are set out in Annexure B.

2. But whatever the relationship of Prime Global Brands Ltd to the Corporate Respondents, two things are clear. First, the Condor Designs are irrelevant to the newness and distinctiveness of the Designs (ie the validity question) because they were published subsequently: s 16(3). Secondly, the fact that the Condor Designs were accepted for registration says nothing with respect to their own newness and distinctiveness (ie the infringement question); s 39 requires the Registrar to register any design (subject to certain exceptions: s 43) that satisfies certain formalities; there is no inquiry into whether the design is registrable. It is only during the examination process that the Registrar considers whether the design is registrable: s 65. (Indeed, in this case an examiner raised the concern that the Condor Designs were not new and distinctive in light of LED Tech’s prior Designs.) Even then, a Registrar’s decision upon examination is not entitled to judicial deference: see s 88. In short, the fact that the Corporate Respondents may maintain registered (and even examined) designs in respect of their own products is irrelevant to the judicial determination of whether those products infringe the earlier-registered Designs and whether those Designs are registrable.

   B.       AUTHORSHIP AND REVOCATION

3. It is convenient to start with the cross-claimants’ contention that the Designs should be revoked pursuant to s 93(3) of the 2003 Designs Act because “M”, not Mr Ottobre, is in fact the sole or joint author entitled to registration. For their part, the cross-respondents have two responses: (1) Mr Ottobre is the sole author of the Designs and his employer LED Tech is the only person entitled to registration; and in the alternative (2) even if “M” (jointly) created the Designs, it did so pursuant to a contract with LED Tech and therefore would not be a person entitled to registration under s 13 of the 2003 Designs Act in any event. With respect to the first point, the cross-claimants dispute the proper legal characterization of the facts relevant to creation; with respect to the second, they submit that as a matter of law an independent contractor such as “M” must be distinguished from an employee (whose design created in the course of employment they concede would belong to the employer).

4. Who then, in fact, is entitled to be entered as the registered owner of the Designs? Section 13(1) of the 2003 Designs Act lists the persons “entitled to be entered on the Register as the registered owner of a design that has not yet been registered.” The list is:

   (a) the person who created the design (the designer);

   (b) if the designer created the design in the course of employment, or under a contract, with another person - the other person, unless the designer and the other person have agreed to the contrary;

   (c) a person who derives title to the design from a person mentioned in paragraph (a) or (b), or by devolution by will or by operation of law;

   (d) a person who would, on registration of the design, be entitled to have the exclusive rights in the design assigned to the person;

   (e) the legal personal representative of a deceased person mentioned in paragraph (a), (b), (c) or (d).

   Unsurprisingly, more than one person may be entered on the Register as the registered owner of a design: s 13(3)(a) of the 2003 Designs Act. However, each of the persons registered must fall within one or more of the categories of persons listed in s 13(1). If not all of the entitled persons are included in the registration, the court may revoke the registration: s 93(3).

5. The registered owner of the Designs is LED Tech.  The cross-claimants contend that the Designs should be revoked because when each of the Designs was first registered, LED Tech’s Chinese manufacturer, “M,” was entitled to be registered in addition to or in lieu of LED Tech and was not so registered.  The cross-claimants’ contention should be rejected.  To understand the flaws in that contention, it is necessary to restate some of the facts. 

6. In 1987, Mr Ottobre established a business selling automotive parts under the name “Auto Trade Supplies”.  In 2002, Mr Ottobre incorporated a company “ATS Auto Trade Supplies Pty Ltd” in relation to that business.  In April 2002, Mr Ottobre attended the Automotive Parts Association Trade Show in Taiwan and became aware of the use of LEDs in automotive lamps.  At the same trade show, Mr Ottobre met a representative from a Taiwanese company, Valens Company Limited (“Valens”), discussed with that representative the lights that Valens manufactured and ascertained that Valens would be interesting in manufacturing lights for Mr Ottobre’s company.

7. After the trade show, Mr Ottobre developed an 80mm x 80mm square lamp comprised of an injection-moulded lens fitted with LEDs.  The circuit board containing the LEDs was fitted inside the lens, then held in place and sealed by pouring resin over the top of the circuit board.  The lamps were then clipped into a simple base attached to the vehicle.  The resulting lamp was both waterproof and dustproof.  After corresponding by email with the Valens representative, Mr Ottobre visited Valens in Taiwan in mid-July 2003.  Before going to Taiwan, Mr Ottobre prepared sketches of his design for a single square LED lamp, 80mm x 80mm.  At the meeting in Taiwan, Mr Ottobre provided the Valens representatives with the sketches and a sample of a conventional 80mm x 160mm lamp. 

8. Between July and December 2003, Mr Ottobre requested Valens to manufacture the single lens in three sizes – 80mm x 80mm, 100mm x 100mm and 125mm x 125mm.  There were difficulties and relations ultimately soured.  Valens manufactured single LED lamps and the bases for such lamps which were sold in Australia from about February 2004.  Valens continued to supply the lamps without the base until about February 2006. 

9. In approximately April 2004, either during or after attending another Automotive Parts Association Trade Show in Taiwan, Mr Ottobre met in a hotel board room with “M”’s owner and some of its representatives.  Mr Ottobre provided them with samples of a single-lens 80mm x 80mm LED automotive lamp (being the lens manufactured by Valens) and some hand-drawn sketches he had prepared of a lamp base into which individual red, amber and white lamps could be fitted as double and triple combination lamps.  Mr Ottobre did not retain copies of the sketches.  In addition to the samples and the sketches, Mr Ottobre explained the combination lights and his estimate of the likely sales of such lights.  Mr Chao, a representative from “M,” gave evidence that he received the samples and the sketches together with an explanation from Mr Ottobre.  Mr Chao’s evidence was that Mr Ottobre provided three hand-drawn sketches of the base, being a sketch of the dual base from the top view, a sketch of the dual base from the rear view and a sketch of the cross-section of the side view.  The drawings did not show dimensions.  Although Mr Ottobre’s evidence was that his sketches were only of two views, Mr Chao gave evidence that the hand-drawn sketches were of the views set out in the engineering drawings marked “1”, “2” and “3” on Annexure C.  I accept Mr Chao’s evidence.

10. Following the meeting, Mr Chao worked with M’s engineers to convert Mr Ottobre’s hand-drawn sketches into CAD (Computer Aided Design) format.  “M”’s engineers used CAD technology to prepare detailed engineering drawings of a 3D model and 2D drawings of the combination lamp base.  At a practical level, the use of CAD enables an operator of the computer software to lay out and develop work on a screen, print it out and save it for future editing.  Having converted Mr Ottobre’s hand drawn sketches of the base into CAD format, Mr Chao printed the engineering drawings of the lamp base.  A copy of the engineering drawing, in the form of Annexure C, was sent by Mr Chao to Mr Ottobre.

11. On 4 June 2004, Mr Ottobre emailed Mr Chao asking “M” to provide him with a price for making a mould to house, in both dual and triple combination, the LED 80mm lamps with the same pattern lenses as the sample Mr Ottobre had provided to “M” back in April 2004.  On 11 June 2004, M sent by facsimile an invoice to LED Tech quoting US$7,500 to create a “mold for base holder for two LED80 one mold with one cavity”.  Mr Ottobre accepted “M”’s quoted price.  “M”’s engineers used the CAD engineering drawings to prepare a mould for the two combination lamp base.  The CAD engineering drawings were created using the same software that controls the machines which cut moulds from a diecast metal blank from which the products were produced, thus greatly simplifying the process of manufacturing an actual product from the design. 

12. M’s engineers also produced a three-dimensional model of the combination lights.  On 18 June 2004, after receiving a copy of the model, Mr Ottobre printed drawings from the three-dimensional model and used those drawings as the basis for LED Tech’s application to register the dual and triple combination lamp designs.  Mr Chao gave evidence that “M”’s quoted price (and ultimate bill, which was paid by LED Tech) for production of the mould included, without any separate allocation, the cost of creating the CAD drawings, which, as noted earlier, are used to control the die-cutting machines to cut the moulds.

13. Authorship of a design is in the “person whose mind conceives the relevant shape, configuration, pattern or ornamentation applicable to the article in question and reduces it to visible form”:  Chris Ford Enterprises Pty Ltd v BH & JR Badenhop Pty Ltd (1985) 7 FCR 75, 80. On the facts just described, it is clear that Mr Ottobre is the person who conceived the relevant shape, configuration and pattern of the Designs and reduced it to a visible form; “M” simply converted that design to an electronic form in order to facilitate the production process. Put another way, it was Mr Ottobre, not “M”, who had the idea for dual and triple combination LED lamps in one base. It was Mr Ottobre who reduced that idea to visible form in the sketches. As the engineering drawings marked “1”, “2” and “3” on Annexure C record, it was Mr Ottobre’s sketches which contained the features different from those in any other previous design. Accordingly, Mr Ottobre was “the person who created the design” and his company as his employer was the sole person entitled to be registered as its owner: s 13(1)(b) of the 2003 Designs Act.

14. Assuming, contrary to what I have just found, that the facts set out above would support the conclusion that it was an employee or employees of “M”, instead of (or in addition to) Mr Ottobre, who was the author of the Designs, then my conclusion on the entitlement question would not change. I accept (and it was not contested) that “M” was an independent contractor rather than an employee of LED Tech. That being so, “M” and its employees did the work “under a contract with another person” (LED Tech) within the meaning of s 13(1)(b) of the 2003 Designs Act and LED Tech is the person entitled to register the design thus created.

15. There was some dispute as to whether there was in fact any contract between LED Tech and “M” for the creation of the CAD drawings.  The proposition was founded on the basis that there was no separate charge or entry on any billing invoice relating specifically to the provision of that particular service.  It may greatly be doubted that the absence of an itemised amount charged for the service goes any distance towards showing that the work was not done under a contract.  Be this as it may, in the end, I accept the evidence of Mr Chao that the price on the invoice for the moulds included in it the cost of the creation of the CAD drawings, which were necessary and incidental to the manufacture of the moulds themselves.  In other words, I am satisfied that the Designs, to the extent that they were created by “M” at all, were so created pursuant to a contract with LED Tech.

16. The only remaining question, then, is whether that contractual relationship in the absence of an employment relationship is sufficient to make LED Tech the owner of the Designs under s 13(1)(b) of the 2003 Designs Act. In my view, it is. As noted above, the plain language of s 13(1)(b) states that if “the designer created the design in the course of employment, or under a contract, with another person - the other person” is the person entitled to be registered as the design’s owner.  As the disjunctive word “or,” coupled with the commas on either side of the phrase “under a contract” indicate, there are two separate and distinct circumstances in which the creator of a design is not entitled to register it:  (1) where the designer creates the design in the course of employment, whether or not there is a specific contract; and (2) where the designer creates the design under a specific contract, whether or not there is an employment relationship.  This case would fall in the latter category.

17. The cross-claimants submitted that s 13(1)(b) should be found to have the same meaning as s 19(2) of the Designs Act 1906 (Cth) (“the 1906 Designs Act”), which provided that “[w]here, in accordance with an agreement for valuable consideration entered into by a person with another person, the other person or an employee of the other person acting in the course of his employment makes a design for the first-mentioned person, the first-mentioned person is the owner of the design.” I agree that the language of the old provision is substantively not different from the new. It is to be noted, however, that under this provision of the 1906 Designs Act, employees are distinguished from “other persons” acting in accordance with a contract (ie independent contractors) by use of the disjunctive “or” to establish two separate and independent circumstances in which the ownership of a design does not vest in its creator. That is, the text of the former Act bears a construction that I would independently ascribe to the current provisions. Moreover, the cross-claimants cited no case or authority (and my own researches have discovered none) to contradict or otherwise dissuade me from this plain reading of the old and new acts. Accordingly, the submission that an independent contractor such as “M” retains any entitlement to register a design created pursuant to a contract must be rejected.

18. For those reasons, the cross-claimants’ contention that the registration of the Designs should be revoked pursuant to s 93(3)(c) of the 2003 Designs Act on the basis that LED Tech is not solely entitled to registration of the Designs because another person also has a co-entitlement is rejected.

    C.       ALLEGED INVALIDITY OF THE DESIGNS AS REPRESENTATIONS UNCLEAR AND LACK CERTAINTY

19. The cross-claimants’ further contention was that the registration of the Designs should be revoked pursuant to s 120(1) of the 2003 Designs Act because the visual features of the registered designs are unclear and are thus invalid. The invalidity is said to arise because the representations fail to adequately delimit the scope of the monopoly afforded by registration.

20. Before turning to the facts relevant to this issue, it is necessary to look again at the system of registration prescribed by the 2003 Designs Act. A registered design is a design that is registered in conformity with the 2003 Designs Act: s 5. The 2003 Designs Act requires that there be a Register kept at the Designs Office: s 111(1). The Register may be kept by computer: s 112. Particulars of a registered design must be entered in the Register: s 111(2). Those particulars include representations of the design: s 111(2)(c). A “representation” means “a drawing, tracing or specimen of a product embodying a design or a photograph of such a drawing, tracing or specimen”: s 5. The public is entitled to access all documents filed in connection with the registration of the particulars of a design: ss 111(3) and 113(1). If the Register is kept by use of a computer, inspection of the Register is satisfied by giving the public access to a computer terminal that they can use to inspect particulars kept by use of a computer: s 113(2).

21. The Register is prima facie evidence of any particulars entered in it: s 118. Moreover, if the Register is wholly or partly kept by use of a computer, a document issued by the Registrar producing in writing all or any of the particulars comprising the Register or that part of it, is admissible as prima facie evidence of those particulars: s 118(2). Finally, a signed copy of or signed extract from the Register is admissible in any proceedings as if it were the original: s 118(3). It will be necessary to return to consider these provisions in further detail.

22. The facts relevant to this issue are not in dispute.  The legal characterisation of them is disputed. 

23. IP Australia operates a website at Access to that part of the Register kept by use of a computer is through this website.  A copy of one form of the representations of each Design extracted from the IP Australia website is set out in Annexure A.  These representations were also attached to Certificates of Registration produced by the Designs Office and tendered in evidence.  The drawings in Annexure A are pink and faint.  It will be necessary to return to consider the form of these drawings later in these reasons for decision.

24. To use the IP Australia website to search for representations of a registered design, it is first necessary to go to a webpage headed “AU Designs Data Searching – Introduction”.  That page informs users that not all representations are available online and that copies of representations can be obtained from the Designs Office in Canberra.  The foot of the page contains a statement that “[c]ontinuing further indicates your acceptance of the terms and conditions defined in ‘Legal and Copyright’ button above”.  That “Legal and Copyright” notice states, inter alia, that the databases accessible through the IP Australia website contain errors and inaccuracies.

25. LED Tech’s solicitor gave evidence in this matter that, in addition to inspecting that part of the Register maintained by computer, he inspected the physical files maintained by IP Australia in respect of each of the Designs which had been sent from Canberra to Melbourne.  Each physical file included a set of six greyscale drawings with perforations on the left hand margin indicating that they were received by IP Australia on 22 June 2004, being the filing date of the application for registration.  Each set was kept on the relevant file in an envelope endorsed with the word “Informals”.  The greyscale drawings are not faint like the pink drawings displayed on the IP Australia website.  A review of the file maintained by IP Australia revealed that the application for registration of each design in June 2004 was accompanied by one set of the greyscale drawings.  Regulation 4.04(1)(f) of the Designs Regulations2004 (Cth) states that for s 39(2)(a) of the 2003 Designs Act, part of the formalities check is confirmation by the Registrar that the application includes 5 copies of each representation of each design. Of course, LED Tech’s application did not.

1. In November 2004, Mr Ottobre received notice from IP Australia that his application for registration did not satisfy the formal requirements for registration because he had provided the office with only 1 set of representations, namely the greyscale drawings.  The notice stated that if the problem was not fixed within 2 months, the applications might lapse.  The pink drawings were subsequently lodged by Mr Ottobre in response to that request from IP Australia. 

2. Two questions arise for determination.  First, what is the registered design (ie what are the legally cognisable representations of the design), and secondly, is that registered design “reasonably clear and succinct”?

3. In LJ Fisher & Company Ltd v Fabtile Industries Pty Ltd (1978) 1A IPR 565, 571-72, Fullagar J said:

   I am clearly of opinion that a registered design in order to be valid, must be reasonably “clear and succinct”; that is to say the design sought to be monopolised by copyright must appear with reasonable clarity, and without necessity for unreasonably prolonged or complicated series of deductions, from the registered representation of an article to which the design has been applied.  In argument in Phillips v Harbro Rubber Co (1920) 37 RPC 233, Sir Duncan Kerly KC said:

   A design may be valid for any form that is new, subject to this, that it must be distinct and present an appearance that strikes the eye as being different from any previously existing shape. [Emphasis added.]

   …  But in design law I think that the design is addressed to a person of some skill who might be called a person skilled in the art, but that a person skilled in the art is not necessarily familiar with particular methods of manufacture per se; I think he knows the prior art articles and the prior art registered designs and knows as much about manufacture as he would reasonably be expected to deduce from a study of those designs and articles, but not necessarily any more. … I do think that if a design, depicted by reference to an article to which it has been applied, appears difficult to construe, evidence is admissible from persons familiar with those articles and with methods of applying designs to them, at all events where the design is as here confined to configuration.  In what follows I use the expression “person skilled in the art” as a shorthand for a person with the elementary knowledge that I have above indicated; that is to say a person in the circumstances of this case, who is familiar at least with the shape and appearance and (so far as obvious) constituents of prior art roof tiles composed wholly or chiefly of metal, as known at the priority date of the registration.

   (Emphasis added.)

4. Much of the cross-claimants’ arguments proceeded from the premise that no sufficient representation of each Design appeared on IP Australia’s website.  The cross-claimants submitted that the visual features of the Designs were hard to discern when looking at the pink drawings.  Mr Garrard, a consultant to the automotive electrical industry, was called to give evidence by the cross-claimants.  He looked at the pink drawings on the IP Australia website and in the Certificates of Registration produced by the Designs Office tendered in evidence and initially said he had difficulty in understanding the features of the Designs such as the side profile of the base and the degree of rounding of the lens.  In cross-examination, he modified that evidence to the extent of acknowledging that he was able to discern features of the Designs except for the curved ends.  Other witnesses gave evidence about the pink drawings and what they could and could not discern from them.  It is therefore necessary to examine the validity of the cross-claimants’ premise that no sufficient representation of each Design appeared on IP Australia’s website with some care. 

5. As I noted earlier, printed representations of some of what was displayed when IP Australia’s database was searched were tendered in evidence.  Five different views of each Design were tendered.  Even if one of those views were to be thought insufficient to convey to the observer all of the relevant features of the Design it by no means follows that the combination of images is necessarily deficient in that respect. 

6. In my view, it is possible to discern from the printed representations the visual features of the Designs, including the two particular matters to which Mr Garrard drew special attention, the side profile of the base and the degree of rounding of the lens.  Adopting the language of Fullagar J, I consider each Design to be reasonably “clear and succinct”.  It may be said that the pink drawings are not perfect or that they could be better or clearer.  However, each Design does appear with reasonable clarity, and without necessity for unreasonably prolonged or complicated series of deductions, from the registered representation of an article to which the design has been applied. 

7. It is necessary to record, however, that the documents that were tendered show a particular magnification and resolution of the representations appearing in the database.  Because the data is held electronically and displayed on the IP Australia website (in Adobe Reader as PDF documents), it is possible, within limits, to reproduce the representations at greater magnification than may first be displayed on the screen.  That is, the printed exhibits cannot be taken as necessarily indicating the largest magnification or best resolution of what appears in the database and is accessible by the public.  Again, it is possible to observe on IP Australia’s website the five different views of each Design.  When those views are displayed at higher magnifications, the details and specifications of each Design appear not just with reasonable clarity, but with great clarity. 

8. However, when I asked the parties after the hearing whether it would permissible for the Court to have regard to the magnified displays on the website (which were not tendered into evidence by way of printed or electronic copy), the Respondents contended that there was no evidence that the representations on the IP Australia website could be or were in fact magnified by any witness or that a member of the public seeking information as to a registered design would be expected to electronically magnify the online representations.  I reject both contentions.  First, there was evidence that witnesses had accessed the Designs on the IP Australia website and magnified the representations to some extent.

9. Secondly, the 2003 Designs Act itself makes assumptions and imposes expectations about the public’s access to and use of computers to view the registered designs. As noted earlier, the Act provides that the Register may be kept by computer and that the public must be given access in the Designs Office to a computer terminal in order to inspect the particulars of designs: ss 112 and 113. Notably, the Act does not stipulate that the Designs Office must explain to a member of the public how to use the computer to view the designs; rather, the provision of access is said to be sufficient, which necessarily carries with it a presumption or expectation that the public will know enough about computers to be able to make use of that access without further prompting (or that if they do not know enough, the problem will be theirs rather than that of the Designs Office or the registered proprietor of the design). In that context (ie the context of a design registration system which is publicly accessible through a website and provides a tool to enable users of the system to magnify representations to a size larger than that physically filed), it would be absurd to draw a distinction between a presumption or expectation that a member of the public would be able to access the base-level display of a design on the computer (an expectation which the parties implicitly accepted in their submissions) and a presumption or expectation that that person would not be able to go one further step and click on the magnifying lens at the top of the screen in Adobe Reader without prompting (which was effectively what was put by the Respondents). Because no special skill or complicated process is required to magnify an image (the magnifying lens icon, which is used with the same signification in many internet and desktop computing applications, is displayed prominently at the top of screen as soon as the base-level magnification of the design is opened), once one presumes that a person will be able to access the image at all (again, a presumption implicit in the Act and accepted by the parties) then it must also be presumed or expected that the person could magnify that image without prompting.

10. Although I do not consider it necessary in this case to rely on it in light of ss 112 and 113 of the 2003 Designs Act and my primary conclusion that the printed representations of the Designs tendered in evidence were reasonably clear, I should also note that the doctrine of judicial notice stated in s 144 of the Evidence Act 1995 (Cth) provides an additional or alternative basis for reaching the same conclusion. Section 144 provides that proof is not required about knowledge that is not reasonably open to question and that is common knowledge generally, and that a judge may acquire knowledge of that kind in any way he or she sees fit. I consider that it is not reasonably open to question that PDF images may be magnified in Adobe Reader and that this fact has been and is general common knowledge to any user of computers and the internet during the relevant period of 2004 to the present. Accordingly, I would be inclined to the view that proof was not required that a member of the public seeking information as to a registered design would be expected to be able to electronically magnify the online representations, such that the Court is not barred from viewing the Designs online at higher magnifications.

11. These additional considerations provide separate support to reject the contention that the visual features of the Designs are unclear.  The representations do not fail to adequately delimit the scope of the monopoly afforded by registration.   

12. In the circumstances, I need not express a concluded view as to whether the Register in the case of these Designs is identified as being the representations printed from the IP Australia website and tendered in evidence, as what is held electronically and accessible by the public on the IP Australia website, as incorporating some or all of the hard copy documents held on the file maintained by IP Australia, or as some combination thereof.  The reason is that, in my view, each Design that is registered is reasonably clear regardless of which of the foregoing definitions of the Register is used.  It is therefore not necessary to resolve the question of what exactly is the Register for the purposes of the 2003 Designs Act or to resolve the question which would otherwise arise of what obligation a person who searches the Register electronically has if that search suggests that what is available electronically is incomplete or equivocal in a way which might be resolved by examination of hard copy documents kept on the relevant file. 

    D.       NEW AND DISTINCTIVE

13. The cross-claimants next submitted that, pursuant to s 120(1) of the 2003 Designs Act, each Design is invalid and should be revoked because each is substantially similar in overall impression to the prior art base and, in particular, LED Tech’s own single-lens LED lamp which forms part of that prior art base. That contention should be rejected.

14. The relevant provisions of the 2003 Designs Act are referred to above:  see [9] to [13].  That a design is required to be “new and distinctive” to be protected under the 2003 Designs Act is a threshold requirement introduced in the 2003 Designs Act.  The 1906 Designs Act used very different language.  It required a design to be “new or original” and provided (s 17(1)) that a design was not to be registered in respect of an article if the design:

    (a)differs only in immaterial details or in features commonly used in the relevant trade from a design that, before the priority date in respect of the application for registration, was registered, published or used in Australia in respect of the same article; or

    (b)is an obvious adaptation of a design that, before the priority date in respect of the application for registration, was registered, published or used in Australia in respect of any other article.

15. As a result of difficulties in interpretation and application, the Australian Law Reform Commission (“ALRC”) recommended that the “innovation threshold” in s 17(1) of the 1906 Designs Act be replaced by the two-step “new and distinctive” test now found in the 2003 Designs Act: Report No 74, Designs (1995) (the “ALRC Report”).  The ALRC addressed the issue in the following terms:

    5.8Meaning of distinctive.  Distinctiveness is a term used by the courts to express the quality that a design must have to differentiate it sufficiently from previously published or used designs.  For example the courts have said

    for a design to be protected there must be a special or distinctive appearance, something in the design which captures and appeals to the eye.  To have that effect, the design must be noticeable and have some perceptible appearance of an individual character:  [Dart Industries Inc v Decor Corporation Pty Ltd (1989) AIPC 90-569, 38, 975. In another case, relating to furniture design, it was said that design in such a field is a subtle thing and, provided it is distinctive to the trained eye, I think that registration should not be denied in view of the element of subtlety which is involved in the combination of old features in a particular way and the manner in which they are combined: D Sebel & Co Ltd v National Art Metal Co Pty Ltd (1965) 10 FLR 224, 227; approved in Australian Building Industries Pty Ltd v Woodman McDonald (Glass) Pty Ltd [1986] AIPC 90-302.]

    Other cases have spoken of ‘the overall distinctive appearance of the registered design’ [Firmagroup Australia Pty Ltd v Byrne & Davidson Doors (Vic) Pty Ltd (1987) AIPC para 37, 634, 638] the ridging or grooving of a design being ‘sufficiently bold and distinctive in its appeal to the eye’, [Aluminum Specialities Pty Ltd v Ibis Building Products Pty Ltd (1982) 42 ALR 127, 133] a shape or configuration that is ‘distinctly different’ from that in respect of which a design is registered [Turbo Tek Enterprises Inc v Sperling Enterprises Pty Ltd [1989] AIPC para 90-616, 39, 334, 348] and a design that must be ‘distinct and must present an appearance that strikes the eye as being different’ [Fisher LJ & Co Ltd v Fabtile Industries Pty Ltd (1979) 49 AOJP 3611] …

    5.9Grounds for adopting the new test.  The [ALRC] favours the two tiered approach and the distinctiveness test for several reasons.

    •The distinctiveness test is a design approach. It recognises the importance of design in product differentiation.  It is consistent with the way in which designers work.

    •It will discourage the tendency to focus narrowly on ‘one individual specific appearance’ and to count up the differences between designs.

    •It incorporates in a single concept many of the qualities sought in other unsatisfactory expressions such as ‘judged by the eye’, ‘eye appeal’, ‘immaterial detail’, ‘trade variants’, and ‘obvious adaptation’.

    •It is a more focussed test for assessing the degree to which a design is an advance on the prior art.

    •It allows a different prior art base to be defined for novelty as against distinctiveness.  This is useful because the aim with the novelty test is to exclude identical designs but the aim with the distinctiveness test is to recognise innovation.

    •It directly addresses the need for greater differentiation between designs, both for registration and infringement purposes, that was evidenced by submissions, consultations and the [ALRC’s] survey of design users.

    (Some formatting altered; footnotes moved to text in brackets.)

16. The ALRC Report formed the basis of the 2003 Designs Act:  Explanatory Memorandum to the Designs Bill 2002 (Cth) at 1.  Under the 2003 Designs Act, a design is distinctive “unless it is substantially similar in overall impression to a design that forms part of the prior art base for the design” as it existed before the priority date of each Design: s 16(2) (emphasis added). As noted earlier, that test has an important temporal aspect: anything which occurs after the priority date (the filing date of the application for registration) is irrelevant: s 16(3).

17. Secondly, contrary to the Respondents’ submissions, distinctiveness is to be assessed not by comparing the design in question to the prior art base as a whole but by comparing it individually to each relevant piece of prior art: s 15(1) read with ss 16(1) and (2). Part 4 of Chapter 2 of the 2003 Designs Act must be read as a whole. The Respondents cannot, as they do, simply selectively choose ss 15(1) and 19(2) to support their contention that a comparison is made of the design with the totality of the entire relevant prior art base for that design whilst ignoring the express words of the rest of Pt 4 including ss 16 and 19(1). It is those sections which expressly provide that a design is distinctive unless it is substantially similar in overall impression to a design that forms part of the prior art base for the design.  As a result, a design that combines various features, each of which can be found in the prior art base when considered as a whole but not in any one particular piece of prior art, is capable of being distinctive:  Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588 at [60]; Karen Millen Ltd v Dunnes Stores Ltd [2008] ECDR 11 at [82]-[84] (stating that the registered design must be assessed with regard to particular prior designs rather than a hypothetical amalgam of a number of prior designs).  See also Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2007) 235 ALR 202 (upholding the validity in the patent context of a combination of features known collectively in the prior art).

18. Thirdly, the judgment is an objective one.  In assessing substantial similarity in overall impression, the standard to be applied is that of the informed user - namely, the court standing in the shoes of a notional person who is familiar with the product to which the design relates, or products similar to the product to which the design relates:  s 19(4); Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588; see also Dart Industries Inc v Decor Corporation Pty Ltd (1989) 15 IPR 403, 408-409. That informed user, in assessing substantial similarity in overall impression:

    1.gives more weight to similarities between the designs than to differences between them: s 19(1);

    2.considers the state of development of the prior art base for the design:  s 19(2)(a);

    3.considers the particular visual features of the design described in the statement of newness and distinctiveness in the context in which they appear:  s 19(2)(b) and (c);

    4.if only part of the design is substantially similar to another design, considers the amount, quality and importance of that part in the context of the design as a whole:  s 19(2)(c); and

    5.considers the freedom of the creator of the design to innovate:  s 19(2)(d).

19. The “informed user” concept in the 2003 Designs Act has been the subject of recent judicial consideration in Australia:  Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588 at [19]-[27]; Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589. It is a concept the ALRC borrowed from European Community Design law, now codified in Council Regulation (EC) No. 6/2002 and in the Registered Design Act 1949 (UK):  see ALRC Report, para 5.17-5.21 and 6.12-6.13; Proctor & Gamble Company v Reckitt Benckiser (UK) Ltd (2007) 73 IPR 605 at [32] and J Choo (Jersey) Ltd v Towerstone Ltd [2008] FSR 19 at [7].

1. The “informed user” concept has also been considered by the courts in the United Kingdom.  In Woodhouse UK plc v Architectural Lighting Systems [2006] RPC 1 at [59], Judge Fysh QC of the Patents County Court defined an informed user in the following terms:

   First, this notional person must obviously be a user of articles of the sort which is subject of the registered design - and I would think, a regular user at that.  He could thus be a consumer or buyer or be otherwise familiar with the subject matter say, through use at work.  The quality smacks of practical considerations.  In my view the informed user is first, a person to whom the design is directed. Evidently he is not a manufacturer of the articles and both counsel roundly rejected the candidature of “the man in the street”.  “Informed” to my mind adds a notion of familiarity with the relevant rather more than what one might expect of the average consumer; it imports the notion of “what’s about in the market?” and “what has been about in the recent past?”  I do not think it requires an archival mind (or eye) or more than an average memory but it does I think demand some awareness of product trend and availability and some knowledge of basic technical considerations (if any).  In connection with the latter, one must not forget that we are in the territory of designs and thus what matters most is the appearance of things; as Mr Davis reminded me, these are not petty patents.  Therefore, focus on eye appeal seems more pertinent than familiarity with the underlying operational or manufacturing technology (if any).  I feel uncomfortable with analogy to the “man skilled in the art” whose “nerd-like” (and other) attributes seem too technical: Technip France SA’s Patent [2004] R.P.C. 46 at [6-12] ( CA).

   This formulation was considered and approved by Lewison J in Proctor & Gamble Company 73 IPR 605 at [31], [32] and [41] and was also applied in Application by Pauline Ann Walton to invalidate UK Registered Design in the name of Zap Ltd [2007] ECDR 10.  To the extent that it matters (and it might not), the Australian Designs Office (“the ADO”) has indicated that the informed user concept is an objective test where the user is an ordinary or typical member of a sample of users of the product who is reasonably informed, being neither barely informed nor fully expert:  Apple Computer Inc (2007) 74 IPR 164 and Icon Plastics Pty Ltd [2007] ADO 2 as discussed in Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588 at [25].

2. Although it would be dangerous to attempt some comprehensive statement of principles that might be applied to the concept, it is apparent that an informed user:

   1.is reasonably informed; not an expert but more informed than an average consumer;

   2.is an objective standard.  However, expert evidence may still be adduced in court to assist the Court in applying the informed user concept;

   3.focuses on visual features and is not concerned with internal features or features that are not visible to the naked eye.

3. In the present case, the Respondents accept that each Design is new when compared to the prior art base as it existed before the priority date of each Design.  The question which then arises is whether each Design is distinctive.  In order to answer that question, two sub-questions arise for consideration.  What was the prior art base before the priority date of each Design?  What are the visual features of each Design? 

4. The prior art in evidence was extensive.  The Respondents placed specific reliance upon the following prior art base products:

   1.the products depicted in the Narva Catalogue 2000/2001;

   2.the Britax “Squircular”;

   3.the products depicted in the Britax catalogue 2000/2001;

   4.the products depicted in the Narva Catalogue 2004/2005 (except those marked “new”);

   5.some of the products depicted in the Hella Catalogue 2003/2004;

   6.SYK Catalogue and products; and

   7.LED Tech’s single-lens LED lamp.

5. Before turning to consider the prior art base, at this point in the argument it is important to remember that the Respondents accept that the following distinctions existed between the prior art base (which, incorrectly, they would have considered as a whole) and the Designs:

   1.the absence of visible screws;

   2.the different visual features of the rear or base views of the Designs;

   3.the “cut-out” or “recess” at the end of a lamp; and

   4.the sloping, rounded mounting bracket surrounding the lenses.

6. The question is whether an informed user - a person familiar with the product to which the design relates, or products similar to the product to which the design relates, and having regard to those matters listed in [56] above - would consider a Design with the distinct features listed in [62] as substantially similar in overall impression to a design that forms part of the prior art base for the design?  In my view, such a person would not consider either Design to be substantially similar in overall impression to a design that forms part of the prior art base for the design. 

7. If one looks at the designs which comprise the prior art base, one can identify designs and products, including LED Tech’s single-lens lamp, with some of the features found in each of the Designs - a lens separate from the base and from each other, a low profile with an open base and no visible screws.  However, none of those designs include all or most of the features listed in [62] above, being features described in the statement of newness and distinctiveness for each of the Designs:  see [2] above.  For example, if one looks at LED Tech’s single-lens lamp, it is apparent that, apart from the absence of visible screws, the product contains none of the other features.

8. If one turns to consider the state of development of the prior art base, each of the Designs and the features described in the statement of newness and distinctiveness was a distinct advance over the prior art base in the sense that it combined various existing features in a way that had not been done before.  On application to register each Design, the advances recorded in those Designs over the prior art base were substantial.  And, as was acknowledged by Mr Garrard, each of the features listed in [62] was quite arbitrary from a design point of view.  That is to say, the features were the product of conscious design choice rather than compelled by industry-wide standards or technological constraints.  Contrary to the Respondents’ contentions, the visual features chosen by Mr Ottobre were not “so little different from the designs available in the prior art base” as to be substantially similar in overall impression.  Visually the product was different – it was modern and streamlined with curved edges.  No product in the prior art base incorporated all (or most) of the features listed in [62] in one product.  In those circumstances, I do not consider that a person familiar with the product to which the design relates, or products similar to the product to which the design relates, would consider either Design as substantially similar in overall impression to any of the designs that form part of the prior art base. 

9. In considering the prior art base and the issue of whether each Design is substantially similar in overall impression to any of the designs that form part of the prior art base, the Respondents submitted that it was necessary to consider a product comprising several of LED Tech’s single-lens lamps set side by side.  Although at least one witness, Mr Carpenter, gave evidence that he had seen LED’s single lenses installed side by side on vehicles, it was by no means clear when he saw such a configuration or what the precise configuration as to number and composition looked like.  That lack of detail is probably fatal to the contention that each Design is substantially similar in overall impression to an arrangement of LED Tech’s single-lens lamps side by side. 

10. Furthermore, even if I were to assume, hypothetically, that a person had physically abutted two or three of LED Tech’s single-lens lamps side by side before the priority date of each Design and that such a creation constituted a design publicly used in Australia within the meaning of s 15(2) so as to make it a part of the prior art base, I do not consider that a person familiar with the product to which the design relates, or products similar to the product to which the design relates, would consider each Design to be substantially similar in overall impression to such a configuration. Instead of one continuous base along the long axis, there would be two or three bases with no flat strip or landing between each lens. And the sides of each base would not comprise a sloping, rounded mounting bracket surrounding a lens but would have vertical or straight sidewalls surrounding each lens. The underside of the bases would be different in shape, with mounting holes in different positions. For those reasons as well, the cross-claimants’ contention of substantial similarity is rejected.

    E.       INFRINGEMENT

11. LED Tech contends that the Condor Designs with code numbers TL80RA, TL80RRA / TL80ARR, TL80ARW, TL100 ARR / TL80RAA, TL100ARW, TL125 AAR / TL125 RRA and TL125 ARW (“the Condor Products”) infringe the Designs. 

12. It is common ground that the Condor Designs are not identical to the Designs. The question then is whether the Condor Products embody designs that are “substantially similar in overall impression” to the Designs: s 71(1)(a) of the 2003 Designs Act.

13. The 2003 Designs Act was drafted so that the test of whether an allegedly infringing product is substantially similar in overall impression to the registered design is the same test applied to determine whether a design was distinctive for registration purposes:  ALRC Report pars 5.22-5.23.  As the ALRC said, “[T]he infringement and distinctiveness tests should be the same so that an infringing design is not a distinctive design and vice versa”:  para 5.22.  Adopting the same test for distinctiveness and infringement broadens the scope of protection.  The extent of difference required to make a design distinctive will depend on the state of development of the relevant prior art base.  A more developed prior art base will mean that smaller differences will be sufficient to result in a finding that there is no substantial similarity:  para 5.23.

14. How then does one assess the overall impression of a design in infringement proceedings?  As noted earlier, until recently there has been little Australian judicial consideration of the 2003 Designs Act.  The principal cases to date include Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588; Review Australia Pty Ltd v Innovative Lifestyle Investments Pty Ltd (2008) 166 FCR 358; Review Australia Pty Ltd v New Cover Group Pty Ltd [2008] FCA 1589 and World of Technologies (Aust) Pty Ltd v Tempo (Aust) Pty Ltd (2007) 71 IPR 307.

15. The principles set out in [53]-[59] are equally applicable in the infringement context. As s 71 of the 2003 Designs Act (read with s 19) makes clear, the court assesses whether the allegedly infringing design is substantially similar in overall impression to the registered design by comparing the allegedly infringing product to the registered design in the context of the whole appearance of the designs: see also ALRC Report para 6.25. The whole appearance is relevant as the context for the design even though, strictly, the design is only the distinctive visual features of the product. Greater weight is given to distinctive features than to other parts of the design, although still in the context of the whole of the appearance. The same principles of assessment apply where the distinctive features relate only to part of the design: ss 19(2)(b)(ii) and (c). Moreover, in determining whether a design is infringed the Court must give more weight to similarities between the designs than to differences between them: s 19(1).

16. This legislative approach to the question of infringement ensures that courts assess infringement in the context of the whole appearance of competing designs rather than focusing on the differences between them.  In addition, the scheme of the 2003 Designs Act requires the Court looking through the eyes of an informed user to consider:

    1.the state of development of the relevant prior art base.  As stated earlier, one measure is whether the difference in distinctiveness between the Design and any previously known design is greater than the difference between the Design and the allegedly infringing design:  s 19(2)(a);

    2.the new and distinctive features of the design:  s 19(2)(b)(i);

    3.where only part of a design is substantially similar to another design, the amount, quality and importance of that part in the context of the design as a whole:  s 19(2)(c);

    4.the freedom of the creator of the design to innovate.  In other words, the nature and use of a product, or part of it, is a factor in defining the scope of the designer’s freedom to choose shape and materials:  s 19(2)(d).

17. There is little doubt that first impressions are important when comparing a registered design with an allegedly infringing product in the manner prescribed by the 2003 Designs Act:  ALRC Report para 5.15.  In the United Kingdom, in applying an “overall impression” test, the approach is to hold a product embodying the registered design (provided that the Court is satisfied that it is a true embodiment of the registered design) and the alleged infringing product in hand and undertake a reasonably careful comparison between the two:  Proctor & Gamble Company 73 IPR 605 at [12]. See also J Choo (Jersey) Ltd v Towerstone Ltd [2008] FSR 19 at [6] (citing Proctor & Gamble for the proposition that court may have regard to a physical embodiment of the registered design in making the comparison to the allegedly infringing product); but see Rolawn Lawn Ltd v Turfmech Machinery Ltd [2008] EWHC 989 Pat at [124] (stating that the exercise involves comparing the registered design to a photograph of the allegedly infringing product rather than the product itself).

18. With respect, I disagree with the proposition that as a general matter a court should start out by comparing product with product rather than registered design with product. First and most importantly, such an approach is inconsistent with the statutory language. Section 71(1)(a) directs the court to perform the substantial similarity analysis by comparing a product (the allegedly infringing item) to the registered design. Secondly, Jacob LJ’s approach is inconsistent with that taken by Kenny J in Review 2 Pty Ltd v Redberry Enterprise Pty Ltd [2008] FCA 1588 at [28], [35]. Significantly, the expert evidence in Review was challenged on the basis that the witness had improperly compared product with product (and had even tried the products on): see [33]. Although Kenny J ultimately allowed the evidence, her Honour nevertheless proceeded on the basis that the comparison for the court was between registered design and product and the expert evidence in question had to be taken subject to the complaints made by the other side: see [34]-[36].

19. I am of a similar view.  While there may be circumstances in which it is appropriate (or at least not wholly inappropriate) for an expert witness giving evidence as an informed user to have regard to a product embodying the registered design in providing an opinion on the substantial similarity question, the task for the court itself as laid down by the statute remains to compare the registered design to the allegedly infringing product.  Moreover, even if I were not inclined to the view of Kenny J, I could not, in light of the statutory language, consider her Honour’s approach plainly wrong, and thus I would follow it in preference to Jacob LJ’s approach in any event.

20. I therefore conclude that infringement is determined by comparing the allegedly infringing product against the registered design, not by comparing a product embodying the registered design against the infringing product: s 71. Thus the fact that the actual LED light is similar to the Condor TL light is not relevant. Moreover, infringement is determined by comparing only the visible features of the design to the infringing product: ss 7 and 19. Thus the fact that the products have different materials in the lens or have different voltages is also irrelevant.

21. If a visual comparison is made of the top view of a Condor product (such as the TL80ARW) against the registered design (eg figures 1, 2, 3 and 4 of 6 in Annexure A), the Condor product is “substantially similar in overall impression” to the Designs: s 71(1)(a) of the 2003 Designs Act. There is a continuous base. There is a flat strip or landing between each lens. The sides of the base of both the Designs and the Condor product comprise a sloping, rounded mounting bracket surrounding the lenses.

22. It is true that the Condor Products contain visible screws while the statement of newness and distinctiveness accompanying the Designs emphasises the “no visible screws” feature of the Designs.  However, although the Condor product contains two screws in each flat strip or landing between each lens, it is not a feature which in my view substantially distinguishes the Condor product from the registered Design.  The presence of the screws does not create a different “visual appeal”.  The screws are the same colour as the flat strip or landing between each lens and sit low in the socket.  They are not “visual” screws as one would describe the screws in some of prior art such as the Narva Model 48 94840 or Hella 2400, where the screws are chrome in colour and protruding.

23. Figures 5 and 6 of the Design are of the rear view of the Design.  Upon a visual comparison of the rear view of the same Condor product against figures 5 and 6 of the Design, the Condor product is “substantially similar in overall impression” to the Designs.  Again, there is one base with rounded corners.  There is an opening for each lens of similar shapes with the shapes in the same configuration.  There is the same number of mounting holes for the screws and the holes are in the same position. 

24. Moreover, as Mr Garrard properly conceded at trial, the Condor Products are much closer to the Designs than they are to LED Tech’s own single-lens LED lamp which forms part of the prior art base.

25. For those reasons, the Condor Product with the code number TL80RA infringes Design No.302359 – dual lens and each of the Condor Products with the code numbers, TL80RRA / TL80ARR, TL80ARW, TL100 ARR / TL80RAA, TL100ARW, TL125AAR / TL125 RRA and TL125 ARW infringe Design No.302360 – triple lens. 

26. Having determined that the Condor Products infringe the Designs it is necessary to consider the question of relief and whether the respondents have an affirmative defence under s 75(2) of the 2003 Designs Act.

    F. AFFIRMATIVE DEFENCE: S 75(2) OF THE 2003 DESIGNS ACT

27. Strictly speaking, the Respondents did not (and could not) plead a s 75 affirmative defence because they had “taken advice” (that is, they were aware that LED Tech’s products were the subject of registered design protection and had in fact sought legal advice as to whether their own products would infringe). However, they did raise s 75 in the context of their argument (considered at [32]-[50] above) about the Register and invalidity of the Designs due to the uncertainty of the representations contained therein. Because s 75 does inform the debate about the limits of the monopoly conferred by registration under the 2003 Designs Act (an Act which has to be construed as a whole), it is therefore still useful to examine it (operating under the assumption that the Respondents had not “taken advice”) in order to see whether the Respondents could otherwise have made out the defence.

1. In determining whether this level of conduct and knowledge establishes liability, each cause of action needs to be considered separately. 

   Joint tortfeasors to the design infringement?

2. In relation to the infringement of the Designs, LED Tech alleges that the Directors are joint tortfeasors to the design infringement as each had “a common design” with Ren and Olsen to infringe the Designs. 

3. As submitted by counsel for the Directors, the test to be applied is far from certain.  One line of cases adopts what is known as the “direct or procure” test (Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1, 14-15, while the other line of cases adopts the test in Mentmore Manufacturing v National Merchandising Manufacturing (1978) 89 DLR (3d) 195 that a director is only personally liable if it is reasonable to conclude that the purpose of the director was not the direction of the manufacturing and selling activity of the company in the course of his relationship to it but the “deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it”: at 204-205.

4. In Allen Manufacturing Co Pty Ltd v McCallum & Co Pty Ltd (2001) 53 IPR 400 at [39], a design infringement case, the Full Court of the Federal Court considered the two tests in the following terms:

   The authorities were collected and analysed by Beazley J in King v Milpurrurru (1996) 66 FCR 474 at 494-500….. Her Honour noted the existence of two lines of authority. One line supported what she called the “Performing Right Society test”: whether the director had “directed or procured” the company’s infringement.  The other line supported “the Mentmore test”: whether the director had engaged in “the deliberate, wilful and knowing pursuit of a course of conduct that was likely to constitute infringement or reflected an indifference to the risk of it”.  Beazley J expressed a preference for the Mentmore test, on the basis that the Performing Right Society test did not “pay sufficient regard, either to the separate legal existence of the company, or to the fact that the company acts through its directors”: see [66 FCR at 500]. However, this preference had no immediate consequence; her Honour held (again at [500]) that the appellants were not liable under either test.

5. After listing a number of cases (at [40]-[41]) supporting each approach and considering the submissions of the parties, the Full Court went on to say (at [43]-[44]):

   The difference between the two tests may be more apparent than real.  We are not aware of any case in which it has been held that a director or officer of a company directed or procured the company’s infringing act, yet that person escaped liability because he or she did not deliberately, wilfully or knowingly pursue a course of conduct that was likely to constitute infringement or that reflected indifference to the risk of infringement.  This may be because, in practice, an act of direction or procurement will generally meet the Mentmore test.  It is notable that, in Mentmore itself, the Canadian Federal Court of Appeal declined (at 204) to “go so far as to hold that the director or officer must know or have reason to know that the acts which he directs or procures constitute infringement”. The Court declined to do this because that “would be to impose a condition of liability that does not exist for patent infringement generally”.

   To the extent there is a real difference between the tests, each has eloquent supporters.  One day it may be necessary, in a practical sense, to choose between them.  But it is not necessary to do so in this case.

6. The position here is the same.  This is not a case in which Messrs Keller and Armstrong acted only as directors of the infringing companies.  Each had personal knowledge of the Designs and of the other facts and matters set out above (see [169]).  To adopt the language of the Full Court, it was clear that each of Messrs Keller and Armstrong “was personally an actor invading [LED Tech’s] rights: by creating the [Condor Products]” and taking the other steps outlined above.  These sequences of actions were “the deliberate, wilful and knowing pursuit of a course of conduct” that was likely to constitute infringement or, at least, reflected a conscious indifference to the risk of infringement.  As a result, each of the Directors also engaged in the design infringement.  Each is a joint tortfeasor to the design infringement as each had “a common design” with Ren and Olsen to infringe the Designs and is jointly and severally liable to LED Tech for the damages assessed. 

   Secondary liability under the TPA

7. The next matter to be considered is the claim of secondary liability of the Directors under the TPA. The principles are well established. Natural persons will be liable in damages for a contravention by a corporation if they had a “close, rather than a remote involvement in the contravention”: Fencott v Muller (1983) 152 CLR 570, 584. Moreover, the participation in the contravention requires actual, rather than constructive, knowledge of the essential matters that make up the contravention: Yorke v Lucas (1985) 158 CLR 661, 666-670 and 677, Rural Press Ltd v ACCC (2002) 118 FCR 236 at [67] and Quinlivan v ACCC (2004) 160 FCR 1 at [8]-[9].

8. Did Messrs Keller and Armstrong had actual rather than constructive knowledge of the “essential matters” that make up the contraventions under the TPA?

9. As noted earlier, two contraventions were pleaded; namely that the Directors “aided and / or abetted and / or were directly or indirectly knowingly concerned in, or party to” (1) the alleged mislabelling of the Condor Products as to compliance with the ADRs (in contravention of ss 52, 53(a) and (c) of the TPA) and (2) the alleged contraventions of ADRs 1, 6 and 49 as “prescribed consumer product safety standards” (in contravention of s 65C of the TPA). The former was made out, but the latter was not.

10. However, as explained earlier in these reasons for decision (see [162]-[166]), notwithstanding that one or more of the Representations was false, misleading or deceptive or likely to mislead or deceive within the meaning of ss 52 and 53, LED Tech’s claims failed because LED Tech did not establish an essential element of the cause of action – damage. As a result, it is unnecessary to consider whether the Directors “aided and / or abetted and / or were directly or indirectly knowingly concerned in, or party to” the contravention by the corporation.

11. However, if LED Tech had established damage, I do not consider that each of Messrs Keller and Armstrong knew of the “essential matters” that enabled the representations to be characterised in the manner contended: ACCC v Kaye [2004] FCA 1363 at [182]-[186]. To adopt the language of the majority of the Full Court in Medical Benefits Fund of Australia Ltd v Cassidy (2003) 135 FCR 1 at [12-16], although I accept that each of Messrs Keller and Armstrong knew (1) that the Condor Products were manufactured, sold and packaged and (2) the content of the manner in which they were sold which might lead members of at least one class of consumer to believe that the products complied with “prescribed consumer product safety standards”, I do not conclude that either Messrs Keller or Armstrong knew the facts that meant that the Representations were not correct. As to the “ADR Approved” representation, they gave evidence as to their subjective understanding of the representation conveyed, which, while possibly negligent or even reckless, was not such as to suggest wilful blindness or actual knowledge of how a relevant purchaser might understand it. As to the “Complies with ADR” representation, their evidence (which I accept) was that they relied upon oral and written assurances from their Chinese manufacturer and testing laboratories which turned out to be belatedly or never substantiated. Was that conduct less than wise? - Yes. Was it negligent and possibly even reckless? - Again, yes. But on the current state of the authorities that is not sufficient to establish the actual knowledge necessary to establish accessorial liability under the TPA. Significantly, it was never put to either Mr Keller or Mr Armstrong during the course of cross-examination that they knew these “essential matters”. Accordingly, even if LED Tech had established that the TPA contraventions had caused it damage, they could not establish the secondary liability of the Directors for those contraventions.

    J.        ADDITIONAL CROSS-CLAIMS AGAINST LED TECH AND MR OTTOBRE

12. By way of cross-claim, the cross-claimants contend that LED Tech and Mr Ottobre engaged in conduct which constitutes unjustified threats of design infringement and, separately, other conduct which breaches s 52 of the TPA.

    Unjustified threats of design infringement

13. There were two allegations of unjustified threats of design infringement under ss 77 and 79 of the 2003 Designs Act.  The first concerned a document circulated by LED Tech on 5 February 2007.  The second related to a letter sent by LED Tech’s solicitors to Ren and Olsen dated 7 September 2007. 

14. Neither of these documents supports such an allegation.  First and foremost, I found that the Designs were properly registered and the claim of infringement is made out, so it could not be said that allegations of infringement were unjustified even if they were deemed threats:  Nine Network Australia Pty Ltd v IceTV Pty Ltd (2007) 73 IPR 99 at [232] (suggesting that where there is actual infringement a threat will not be unjustified). Secondly, the 5 February 2007 document did not, in its terms, contain any threat of proceedings for design infringement. The document contained 6 paragraphs. The first five related to the ADRs. The last paragraph stated:

    Since the lamps are similar in appearance to LED Technologies’ lamps, we are currently consulting our legal advisers regarding litigation against vendors of these lamps in order to protect our reputation and to protect consumers.

    Taken at its highest, it states that LED Tech was seeking legal advice.  It makes no threat of proceedings for design infringement:  but cf Occupational and Medical Innovations Limited v Retractable Technologies Inc (2007) 73 IPR 312 (concluding that a similar letter constituted a threat under s 128 of the Patent Act 1990 (Cth)).

15. Thirdly, the second event, the 7 September 2007 letters, contained a threat of legal proceedings at a time when the current proceedings had already been on foot for some 5 months against Elecspess and AAA in respect of infringement of the Designs:  see Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2008) 76 IPR 83 at [41] and authorities there cited (stating that threats made after proceedings have already been instituted or that result in the bringing of proceedings are less likely to be deemed unjustified).

16. For those reasons, the cross-claimants’ claim of unjustified threats of design infringement is rejected.

    TPA claims

17. The cross-claimants also claim that LED Tech and Mr Ottobre engaged in misleading and deceptive conduct. The conduct said to breach s 52 of the TPA comprised three separate events.

    LED Tech’s website

18. The first concerned the contents of LED Tech’s website from 25 July 2007 until 7 January 2008 insofar as that website contained the following statements under the heading “Beware of Inferior Copy’s (sic) from China” (“Website representation”):

    Below is a list of company’s (sic) with Questionable Practices, these company’s (sic) are either Notorious for Ripping off Original Designs, Ripping off Trademark Names, Stamping ADR … on Lenses when they are not, and selling Inferior, Low Quality, Low Grade copied products that fail.  The below companies do not have our specially formulated resin and their resin sealing method will crack away from the lenses with temperature changes and vibration.  The below companies may claim they have this method, but can you trust them.

    1/ China Trailer Industry manufacturers of Condor brand lamps which are inferior copies of our product, leaking lenses, low grade LEDs, product recalled in Australia because they don’t meet the necessary standards, lenses stamped ADR approved when they are not.
    We have instituted copyright proceedings (sic) against Australian importers and resellers in the federal court.

    To view Recall go to >

    The notice was removed from LED Tech’s website on the advice of its solicitor and some months after being told that the Corporate Respondents considered the statements in the notice to be false.

19. At the time that the notice was placed on LED Tech’s website, only Version 1 Condor Products had been sold by Ren and Elecspess in Australia.  Version 3 Condor Products were not sold until after the notice had been taken down from LED Tech’s website in January 2008.

20. On any view, portions of the notice were false at one time or another.  At no time were copyright proceedings instituted.  Moreover, LED Tech knew no later than 7 August 2007 that China Trailer was not the manufacturer of Condor Products. 

21. In the end, however, the conduct does not give rise to any relief.  None of the cross-claimants did or could establish loss or damage resulting from the conduct.  In fact, assuming that the website caused them to lose sales on the infringing Condor Products, then it saved the cross-claimants money in that it reduced the number of their sales (and thus LED Tech’s corresponding lost sales) based on which infringement damages were awarded.  The claim should be rejected.

    August 2007 letter

22. The second event concerned a circular letter distributed in August 2007 entitled “ELECSPESS TO RECALL CONDOR LED LAMPS” (“the Letter Representation”).  The Circular was in the following form:

    Dear Consumer,

    Please be aware that ADR compliance is very difficult to attain by inferior quality lamps, some manufacturers have resorted to stamping the lens as ADR compliant when in actual fact they are not!  With the popularity of LED lamps the market has become inundated with cheap inferior copies of many different original designs.

    This is extremely disappointing for the original designers and we hope that you support us by not purchasing copied products. 

    The contents of the notice below has been published by the ACCC on its website:   >

    The ACCC notice recorded, as was the fact, that its investigation into alleged non-compliance with the ADR for automotive lights had resulted in Elecspess providing a court-enforceable undertaking.  The notice went on to state:

    Elecspess had represented that its range of CONDOR LED Rear Combination Lamps complied with certain [ADRs].  Independent testing showed that these lamps failed to meet the light requirements of the design rules.

    The ACCC considered that by representing that the lamps complied with the rules when they did not, Elecspess falsely represented to consumers that these lamps were of a particular standard.  Elecspess also represented that the lamps had performance characteristics that they did not have.  Further the ACCC considered that Elecspess had supplied goods not compliant with prescribed consumer product safety standards.

    Elecspess responded promptly to the ACCC’s concerns.  It has given the ACCC a s 87B court-enforceable undertaking that it will:-

    ·Complete a total recall of non compliant lamps sold by Elecspess by contacting each affected customer to explain the nature of the contraventions and offer to exchange the non-compliant lamps, and implement a trade practices compliance program.

    ·Not supply products that are subject to consumer product safety standard, unless the products comply with the relevant standard.

    ·Quarantine all non compliant lamps and have them shipped back to the manufacturer in China where the manufacturer will make the necessary changes to these lamps to ensure compliance with the rules   ….

23. The ACCC notice was drafted by the ACCC.  It was factual both historically and in relation to the arrangements existing at the time the notice was issued.  Consistent with ACCC practice, the notice was and remains on the ACCC’s website.

24. The circular was sent to 5,000 automotive part resellers, electricians and truck and trailer manufacturers in Australia in August 2007.  At that time, the Corporate Respondents had only sold Version 1 Condor Products in Australia and had not completed the recall of those products. 

25. There is perhaps an interesting question whether the further dissemination or adoption of a factually true statement made by another would in these circumstances constitute misleading or deceptive conduct.  However, whether the contents of the Circular were false, misleading or deceptive or likely to mislead or deceive can be put to one side because, again, none of the cross-claimants did or could establish loss or damage resulting from the conduct.  The claim should be rejected.

    LED Tech’s packaging

26. The third event concerned the contents of LED Tech’s own packaging from at least December 2005 until November 2007 (“the Packaging Representation”).  The complaint relates to the statement on the rear of packaging that:

    “We only use polycarbonate thermoplastic which has an extremely high impact tolerance”

27. The evidence disclosed that when LED Tech changed manufacturer from Valens to “M”, the composition of the lamps changed from polycarbonate to acrylic, but LED Tech forgot to change its packaging.  The change to acrylic occurred in about January 2006.  Some of the packaging still contained the Packaging Representation in July 2008.  There is no doubt that from January 2006 (at the latest) LED Tech’s products were made of acrylic and not polycarbonate. 

28. As noted earlier, a two-step analysis is to be undertaken in considering the application of s 52 of the TPA. First, is the representation conveyed? If so, is the representation false, misleading or deceptive or likely to mislead or deceive an ordinary or reasonable member of each identified class? There are two hurdles to the claims made by Ren, Olsen and Elecspess. First, the class was not identified. I suspect, but do not know, that if the classes are those identified earlier (ie manufacturers and aftermarket purchasers), the question posed in relation to each of those classes might produce a different result. In other words, an ordinary or reasonable member of those who work in the industry might be different to a consumer who buys the product in the aftermarket. The former might be interested in the composition of the lamp’s lens. The latter I suspect would not be – his or her interest is likely to be price and possibly how the product looks. As Mr Ransom said in evidence, although polycarbonate was very fashionable many years ago, it has never been a factor in a customer’s decision to purchase lamps.

29. This last point brings up the second hurdle faced by Ren, Olsen and Elecspess, which is that they did not and cannot establish that they suffered any loss as a result of the Packaging Representation.  Not only did the evidence show that lens composition is not a significant factor in a customer’s purchase decision at all (ie no causation generally), there is no evidence to show that an accurate representation would have caused consumers to purchase Condor Products as opposed to some other polycarbonate lens (ie no causation specifically).  Furthermore, even assuming that Ren, Olsen and Elecspess had established lost or depressed sales in the period from 2006 to 2008 (which would be difficult, if not impossible, given that the Condor lamps were brought to market well after the January 2006 LED Tech change in lens composition so that there was never a period to which a sales comparison could be made when the Condor lamps were on the market without the Packaging Representation being made), the evidence disclosed numerous other causes for the fact that the sales of Condor Products were likely to be affected.  It is unnecessary to address each of them.  It is sufficient for present purposes to record that the Condor brand was damaged by the ACCC recall, a recall that was consented to.  This second hurdle provides another separate and independent reason why this aspect of the cross-claim fails.

    K.       ORDERS

1. I do not propose to make final orders today.  

2. I will instead order the parties to confer and jointly file short minutes of final orders giving effect to these reasons for decision, including orders as to the further conduct of this matter, by 4.00pm on 23 January 2009.  If the parties are unable to agree, they are to submit a joint statement by 4.00pm on 23 January 2009 identifying: (1) the point(s) of agreement; (2) the point(s) of disagreement; and (3) the respective positions of the parties on the point(s) of disagreement, in which case I will list the matter for further directions or argument as necessary. 

I certify that the preceding two hundred and two (202) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate:

Dated:       18 December 2008

Counsel for the Applicant:	Mr B Caine SC and Ms H Rofe
Solicitor for the Applicant:	Griffith Hack
Counsel for the First, Second, Third and Fourth Applicants:	Mr G McGowan SC and Dr L Duncan
Solicitor for the First, Second, Third and Fourth Respondents:	Herbert Geer
Counsel for the Fifth, Sixth and Seventh Respondents:	Mr G Fitzgerald
Solicitor for the Fifth, Sixth and Seventh Respondents:	Deacons
Counsel for the Cross-Claimants:	Mr G McGowan SC and Dr L Duncan
Solicitor for the Cross-Claimants:	Herbert Geer
Counsel for the Cross-Respondents:	Mr B Caine SC and Ms H Rofe
Solicitor for the Cross-Respondents:	Griffith Hack

Date of Hearing:	15-18, 21-23 and 25 July, 21 August and 27 October 2008
Date of Final Written Submissions:	29 August, 5, 15 and 18 September and 26 October 2008
Date of Judgment:	18 December 2008

ANNEXURE A - Representations of each of the Designs. 

ANNEXURE B - Representations of each of the Condor Designs. 

ANNEXURE C - Engineering drawings