Mainbridge Industries Pty Ltd v Whitewood, G

[1985] FCA 596

Re: MAINBRIDGE INDUSTRIES PTY. LIMITED and FRANCIS GEORGE SYKES
And: GORDON WHITEWOOD and F.M. IBBETT PTY. LIMITED
No. G 456 of 1984
Copyright Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.
Lockhart J.
Wilcox J.

CATCHWORDS

Copyright Law - reproduction of an artistic work in three dimensional form - whether sufficient degree of objective similarity between drawings and allegedly infringing object - question of fact - visual comparison - whether Court may have regard to explanatory notes on drawings in making this comparison.

Copyright Act 1968 para.14(1)(b), sub-ss.21(3); 31(1), 36(1).

S.W. HART & CO. PTY. LIMITED v EDWARDS HOT WATER SYSTEMS (High Court, unreported, 19 September 1985).

HEARING

SYDNEY
#DATE 4:12:1985

ORDER

The appeal be dismissed.

The appellants Mainbridge Industries Pty. Limited and Francis George Sykes pay the respondents Gordon Whitewood and F.M. Ibbett Pty. Limited their costs of the proceedings.

NOTE: Settlement and entry of orders is dealt with in Order 36

of the Federal Court Rules.

JUDGE1

This is an appeal from a judgment of the Supreme Court of New South Wales (McLelland J.) relating to copyright in a "money machine" and in drawings for such a machine. The "money machine" in question is a cabinet with transparent sides and an attached blower that forces a current of air into the cabinet. A person stands inside the cabinet and attempts to catch pieces of paper or other light objects which are being blown about inside by the air current. The machine is used for entertainment purposes, especially in cabarets, clubs and shopping centres. The appellants sued the respondents in the Supreme Court of New South Wales Equity Division for declaratory and injunctive relief in respect of alleged breach of copyright and misuse of confidential information relating both to the money machine itself and to drawings of the machine prepared by the second appellant, Francis George Sykes ("Mr. Sykes"), an industrial designer and plastic fabricator, for the first appellant, Mainbridge Industries Pty. Limited ("Mainbridge").

1. Mainbridge imported a money machine from the United States of America in late March 1984. The managing director of Mainbridge, Mr. Ferguson, saw a photograph of a money machine in a United States magazine late in 1983 and he then established Mainbridge in Australia for the purpose of manufacturing, marketing and exploiting machines of that kind here. There is no suggestion that anyone has any patent rights in the money machine or any similar machines. Mr. Ferguson decided to improve the United States machine and for that purpose he engaged the services of Mr. Sykes. Mr. Sykes told Mr. Ferguson that he had manufactured machines of that kind in the past and that the U.S. machine suffered from various design defects. It was arranged between Mr. Ferguson and Mr. Sykes that the latter would prepare for Mainbridge some drawings of a modified version of the U.S. machine. Mr. Sykes worked on this task between about 20 and 22 April 1984.

2. Mr. Sykes was acquainted with the first respondent, Gordon Whitewood, who was a professional entertainer for whom Mr. Sykes had made articles from time to time. To Mr. Sykes' knowledge Mr. Whitewood had used and promoted machines some years previously which operated on the same general principles as the money machine. Indeed, Mr. Whitewood himself appears to have played some role in their design or construction. He made a money machine called the "Treasure Capsule" in about 1974 which was used in shopping centres. The Treasure Capsule was a little different from the U.S. machine, the principal differences being that the cabinet of the former was cylindrical rather than rectangular, the blowing mechanism was immediately under the cabinet, the air current was directed vertically rather than horizontally and it had smaller dimensions than the U.S. machine. Although originally designed to be used with pieces of paper resembling money the Treasure Capsule was mainly used with polystyrene balls. In 1975 Mr. Whitewood built another machine of somewhat similar function for another entrepreneur. This model had a rectangular cabinet but was smaller in size and the player stood outside and inserted his arms through two openings in the side of the cabinet. This machine was also originally used with pieces of paper but later also with polystyrene balls. In 1981 Mr. Whitewood engaged the services of Mr. Sykes to design and build cabinets for three such machines to fulfil a commission which Mr. Whitewood had from Rothmans for the supply of those machines. They were produced and supplied to Rothmans and used by them. They were known as the "Treasure Casket". They were rectangular in shape and again the player stood outside and put his arms through openings in the side of the cabinet.

3. Mr. Sykes arranged a meeting between Mr. Ferguson and Mr. Whitewood in Sydney on 27 April 1984 where the possibility was discussed of Mr. Whitewood compering for Mr. Ferguson the use of Mainbridge's money machine in shopping centres after it was in production. During the meeting Mr. Whitewood, at Mr. Ferguson's invitation, went to another floor of the same building and looked at the U.S. machine. Mr. Ferguson told Mr. Whitewood that Mr. Sykes was designing a modified version of the machine. The meeting ended on the basis that Mr. Whitewood would give consideration to putting a proposal to Mr. Ferguson as to how they might co-operate in the exploitation of Mainbridge's machine particularly in shopping centres. There was no firm commitment reached at the meeting.

4. On or about 9 May 1984 Mr. Whitewood called at Mr. Sykes' home, as he was accustomed to do from time to time, and during the course of discussion told Mr. Sykes that he had decided not to proceed with Mr. Ferguson. At some later date in May Mr Whitewood again called to see Mr. Sykes and during the course of discussion told him that he had received an enquiry for a money machine and was contemplating making one himself. Mr. Sykes had by this time made the frame for the cabinet of the prototype of the U.S. machine which was visible to Mr. Whitewood in Mr. Sykes' backyard. One part that had not then been produced and therefore was not available to be seen by Mr. Whitewood was the rear step and motorhousing. A sheet containing drawings which Mr. Sykes described as production drawings (to which we shall for convenience refer as "the drawings") and which he had prepared for the prototype was on a wallboard in his workshop together with some chalk drawings when Mr. Whitewood and Mr. Sykes spoke together there. Mr. Whitewood was standing about 4 to 5 metres away from the wallboard. The two men conversed for about 15 to 20 minutes and during that time a telephone call was received by Mr. Sykes either in the workshop or in an adjoining office when Mr. Whitewood may have been alone for a few minutes. Although Mr. Whitewood may then have had an opportunity to inspect the drawings alone he denied that he had done so then or at any other time. Mr. Whitewood said that he saw some chalk drawings on the wall of the workshop but he did not see any detailed drawings and even then he only noticed the chalk plans in a very general way and briefly.

5. There is no real conflict between Mr. Sykes and Mr. Whitewood about what happened on that occasion. There was an opportunity for Mr. Whitewood to inspect briefly the drawings when Mr. Sykes was speaking on the telephone, but that is as far as the evidence goes. It is unlikely that Mr. Whitewood could have seen the drawings in any meaningful way during the conversation with Mr. Sykes if he was standing 4 to 5 metres from it. The drawings were the basis of the appellants' case in this appeal.

6. There were other discussions between Mr. Whitewood and Mr. Sykes but none of any relevance to the present proceedings. During May 1984 Mr. Whitewood received enquiries from different sources for a money machine including an enquiry from a Mr. Spillman on behalf of the second respondent, F.M. Ibbett Pty. Limited ("Ibbetts"), who had seen the U.S. machine in operation at the St. George Sailing Club. Mr. Whitewood made a machine for Ibbetts. It is this machine which the appellants allege was made in breach of the appellants' copyright. Ibbetts took delivery of the machine on 20 June 1984 and shortly thereafter commenced to use it in the Woy Woy area. In the meantime Mr. Sykes had completed the first of the modified machines for Mainbridge and this was publicly operated for the first time on 17 June 1984 at Bankstown Trotting Club.

7. Before the Supreme Court one or other of the appellants claimed copyright in: (a) the drawings; and (b) the modified money machine itself, in each case as an "artistic work". It was alleged that the machine manufactured by Mr. Whitewood and used by Ibbetts was a "reproduction ... in a material form" of the appellants' drawings and of the appellants' modified machine and, accordingly, that the manufacture and "publication" of that machine and any similar machine constituted infringement of the appellants' copyright (sub-para. 31(1)(b)(i) and sub-s. 36(1) of the Copyright Act 1968 ("the Act")). Those provisions are in the following terms:-
   
   

"31(1) For the purposes of this Act, unless the contrary intention appears, copyright, in relation to a work, is the exclusive right -

...

(b) in the case of an artistic work, to do all or any of the following acts:

(i) to reproduce the work in a material form ..."

"36(1) Subject to this Act, the copyright in a ... artistic work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright."

1. Reliance was placed on para. 14(1)(b) of the Act which provides that "a reference to a reproduction ... of a work ... shall be read as including a reference to a reproduction ... of a substantial part of the work". It was alleged that the respondents' machine was a "version" of the drawings in a three-dimensional form for the purposes of sub-s. 21(3) of the Act which provides:-
   
   

"21(3) For the purposes of this Act, an artistic work shall be deemed to have been reproduced-

(a) in the case of a work in a two-dimensional form - if a version of the work is produced in a three-dimensional form; or

(b) in the case of a work in a three-dimensional form - if a version of the work is produced in a two-dimensional form,

and the version of the work so produced shall be deemed to be a reproduction of the work."

1. The claim of infringement of copyright alleged against Ibbetts at the trial was that, by letting the money machine for hire or by way of trade exhibiting it in public, knowing that the making of the machine constituted an infringement of copyright, Ibbetts thereby itself infringed the copyright (s. 38 of the Act). Section 38 provides:-
   
   

"38(1) The copyright in a ... artistic work is infringed by a person who, in Australia, and without the licence of the owner of the copyright-

(a) sells, lets for hire, or by way of trade offers or exposes for sale or hire, an article; or

(b) by way of trade exhibits an article in public,

where, to his knowledge, the making of the article constituted an infringement of the copyright ..."

1. McLelland J. mentioned a number of similarities and dissimilarities between the machine designed by Mr. Sykes for Mainbridge and the machine designed by Mr. Whitewood for Ibbetts to which we shall refer later. His Honour found that the similarities between the machines were insufficient to establish a breach of copyright and that he was unable to conclude there had been any copying or reproduction of the appellants' machine or drawings considered as "artistic work". His Honour said:
   
   

"the number and quality of the differences between the plaintiffs' plans and machine on the one hand and the defendants' machine on the other, both decorative and functional, are such as to render it impossible for the plaintiffs to sustain the proposition that the latter reproduces a substantial part of the former."

His Honour held that the appellants had failed to establish a case of infringement of copyright. He turned to s. 71 of the Act which provides:

"71 For the purposes of this Act-

(a) the making of an object of any kind that is in three dimensions does not infringe the copyright in an artistic work that is in two dimensions; and

(b) the making of an object of any kind that is in two dimensions does not infringe the copyright in an artistic work that is in three dimensions,

if the object would not appear to persons who are not experts in relation to objects of that kind to be a reproduction of the artistic work."

1. His Honour said that, if it had been necessary to consider the application of s. 71 he would have been satisfied that the respondents' machine:
   
   

"would not appear to persons who are not experts in relation to objects of that kind to be a reproduction of"

the appellants' drawings and that by virtue of that section there was no infringement of the copyright in the appellants' drawings.

1. As to the claim based on breach of confidence his Honour held that none of the information relied upon as being confidential could properly be described as of a confidential nature and for that and other reasons that claim failed. In the result, his Honour dismissed the proceedings with costs, but reserved liberty to the respondents or either of them to apply for relief arising from the undertaking of the first appellant as to damages given in connection with the interlocutory injunctions which had been in operation pending the hearing and which, of course, came to an end upon the dismissal of the proceedings.

2. The appellants appealed to this Court from the Supreme Court's judgment. The appellants did not press the claim based on breach of confidence on the appeal to this Court. Nor did the appellants press before us the claim based on infringement of copyright in the money machine itself.

3. The only questions argued before this Court were:
   
   (a) whether Mr. Whitewood infringed the appellants' copyright in the drawings by reproducing a substantial part of them in a material form. Reliance was placed upon ss. 14, 21, 31, and 36 of the Act;
   
   (b) if the making of Mainbridge's money machine did infringe the appellants' copyright, whether Ibbetts had the requisite knowledge mentioned in s. 38 and infringed the copyright by doing the acts referred to in that section;
   
   (c) if Ibbetts did not have the requisite knowledge mentioned in s. 38, whether the appellants are nevertheless entitled to quia timet relief; and
   
   (d) whether the respondents can rely on s. 71 of the Act.

4. The drawings are on a single sheet and contain drawings of the appellants' money machine and its parts from various perspectives. The sheet also contains dimensions, notes and other writings. The parties conducted the appeal on the basis that one or other of the appellants was the owner of the copyright in the money machine and the drawings and that nothing turned on which of them was the owner of the copyright.

5. Counsel for the appellants submitted that the learned trial Judge approached the question of infringement of copyright in the appellants' drawings by adopting wrong principles. First, it was submitted that his Honour determined the question of infringement by stressing the respects in which the respondents' machine was different from the appellants' machine whereas the proper question was whether the appellants' drawings were copied and whether the copying was of a substantial part of the appellants' drawings considered as artistic works. Second, it was submitted that his Honour relied on differences between the two machines in function, materials and equipment which, it was submitted, were irrelevant when determining questions of infringement of copyright.

6. Counsel for the appellants submitted that his Honour erred in holding that similarities between the two machines merely demonstrated similarity in concept and that he failed to examine the objective similarities between the drawings and the machine. It was submitted that upon an objective comparison of the appellants' drawings with the respondents' machine it was plain that the machine reproduced a substantial part of the drawings.

7. Counsel submitted that his Honour erred with respect to the s. 71 defence.

8. It was also submitted by counsel for the appellants that this Court should infer that Mr. Whitewood copied Mr. Sykes' drawings and that this inference was open by reason of the access which it was said he had to them, albeit somewhat fleetingly, in the workshop of Mr. Sykes in May 1984 and because of the alleged similarities between the drawings and the second respondent's machine.

9. It was conceded that the drawings constituted an "artistic work" within the definition of that expression in s. 10 of the Act. The appellants' case was that Mr. Whitewood reproduced the drawings or a substantial part of them by producing a version of them in the form of the respondents' money machine. It was the respondent's case that their machine was not a reproduction of anything in the drawings and that, based on s. 71 of the Act, their machine was an object which would not appear to persons who were not experts in relation to objects of that kind to be a reproduction of anything depicted in the drawings.

10. The questions in issue before us on appeal are essentially questions of fact: S.W. Hart & Co. Pty. Limited v. Edwards Hot Water Systems (judgment of the High Court, 19 September 1985).

11. In that case Gibbs C.J. said at pp. 2 and 3:
    
    

"The notion of reproduction for the purposes of copyright law, involves two elements - resemblance to, and actual use of, the copyright work, or, to adopt the words which appear in the judgment of Willmer L.J. in Francis Day & Hunter Ltd. v. Bron (1963) Ch. 587, at p.614, 'a sufficient degree of objective similarity between the two works' and 'some causal connection between the plaintiffs' and the defendants' work'. Lord Reid said in Ladbroke

(Football) Ltd. v. William Hill (Football) Ltd.

(1964) 1 WLR 273, at p 276; (1964) 1 All ER 465, at p 469:

'Broadly, reproduction means copying, and does not include cases where an author or compiler produces a substantially similar result by independent work without copying. And, if he does copy, the question whether he has copied a substantial part depends much more on the quality than on the quantity of what he has taken.' (see also at pp.283, 288 and 293; pp. 473, 477 and 481 of All E.R.)

In the same case, Lord Evershed said, at p.283; p.473 of All E.R., 'that what amounts in any case to substantial reproduction ... cannot be defined in precise terms but must be a matter of fact and degree'."

1. The trial Judge specified various features of similarity between the two machines, in particular, the use of a mirror on the door, of a square frame construction for the cubicle, of a detachable blower unit, of a rear blower, of a horizontal air current blown in at the base of the cubicle and the general portability of the entire machine.

1. His Honour also identified the following points of dissimilarity, namely:-
   
   - the respondents' machine is substantially smaller and of different dimensions
   
   - the respondents' machine has a domed roof structure which is different in shape and function from the flat roof of the appellants' machine
   
   - the materials and method of construction of the cabinets of the two machines are different
   
   - the respondents' machine has no baffle on the floor to direct air upwards such as is found in the appellants' machine
   
   - the respondents' machine does not permit air to escape through the top of the cubicle; it has holes in the back for the purpose of permitting air to escape whereas in the appellants' machine the air all escapes through the top
   
   - in the respondents' machine air is sucked from the cubicle and recirculated through the blower whereas the appellants' machine does not have this feature
   
   - the rear step and motorhousing for the two machines are quite different in appearance.

2. At the trial the appellants' case was put on two bases, namely, infringement of copyright in the drawings by construction of the respondents' machine and infringement of copyright in the appellants' machine itself by the construction of the respondents' machine. However, it was common ground that the appellants' machine as constructed accurately reproduced the drawings. No doubt for this reason the appellants' case at the trial does not appear to have distinguished between copying the appellants' drawings and copying their machine. This was probably the reason why his Honour approached the question of reproduction essentially by comparing the appellants' machine with the respondents' machine, although we note that his Honour did state the question at one point as being one of comparison between the appellants' drawings and its machine on the one hand and the respondents' machine on the other.

3. The question is not whether there are similarities or dissimilarities between the two machines but whether the respondents' machine closely resembled the appellants' drawings or a substantial part of them. The test is one of appearance; it involves a visual comparison between the drawings and the alleged infringing object: L.B. (Plastics) Limited v. Swish Products Limited (1979) RPC 551 at pp 573-574, 622; and S.W. Hart & Co. Pty. Limited v. Edwards Hot Water Systems (supra).

4. During the hearing of the appeal, at the request of counsel, we inspected the two machines and the U.S. machine of which the appellants' machine is a prototype. We compared the appellants' drawings with the respondents' machine; that was the more relevant exercise. We had regard to the writing and figures on the drawings. The Court, in making this comparison:
   
   

"is entitled to have regard to any writing on the drawing which assists to explain what the drawing represents: Merchant-Adventures v. Grew & Co.

(1972) CR 242, at p 255; Temple Instruments Ltd. v. Hollis Heels Ltd. (1973) RPC 15, at p 19; L.B. (Plastics) Limited v. Swish Products Limited

(supra) at p 622"

per Gibbs C.J. in the S.W. Hart Case, at p. 8.

1. In our view the statement by his Honour of the points of similarity and dissimilarity between the two machines is a basically accurate reflection of most of the similarities and dissimilarities, as the case may be, between the drawings and the respondents' machine. Having compared the respondents' machine with the appellants' drawings and with the benefit of our inspection of the two machines we are satisfied that there is not a sufficient degree of objective similarity to sustain a finding that the respondents's machine reproduced the appellants' drawings. In the light of that conclusion it is unnecessary to consider the question whether the respondents actually copied the drawings or the further question raised by s. 71 of the Act whether the respondents' machine would not appear to persons who are not experts in relation to objects of that kind to be a reproduction of the drawings.

2. The appeal should be dismissed with costs.